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San Miguel Corp v. NLRC & Maliksi, GR No.

147566, Dec. 6, 2006

The act if hiring and re-hiring the petitioners over a
period of time without considering them as regular
employees evidences bad faith on the part of private
Regularization is a labor benefit that should apply to
all qualified employees similarly situated and may
not be denied merely because some employees were
allegedly not parties to or were not impleaded in the
voluntary arbitration case.
It must be noted that the Court extended the benefit
of regularization not only to the original
complainants but also to those workers who are
similarly situated to therein complainants.

LIIKHA-PMPB v. Burlinggame corp., GR No.
162833, June 15, 2007

Job contracting is permissible only if the following
conditions are met: 1) the contractor carries on an
independent business and undertakes the contract
work on his own account under his own
responsibility according to his own manner and
method, free from the control and direction of his
employer or principal in all matters connected with
the performance of the work except as to the results
thereof; and 2) contractor has substantial capital or
investment in the form of tools, equipment,
machineries, work premises, and other materials
which are necessary in the conduct of the business.
Mentioned sec. 5 of DO 18-02 which states the
prohibition against labor-only contracting (see DO)
Promo-girls were directly related to the principal
business or operation of Burlingame. Marketing and
selling of products is an essential activity to the
main business of the principal.
In labor-only contracting, the law creates an
employer-employee relationship to prevent a
circumvention of labor laws. The contractor is
merely an agent of the principal employer and the
latter is responsible to the employees of the labor-
only contractor as if such employees had been
directly employed by the principal employer.

Coca-Cola Bottlers Phil., Inc. v. NLRC, 307 SCRA
131 (1999)

mentioned Singer Sewing Machine vs Drilon: the
definition that regular employees are those who
perform activities which are desirable and necessary
for the business of the employer is not
determinative in this case. Any agreement may
provide that one party shall render services for and
in behalf of another for a consideration (no matter
how necessary for the latters business) even
without being hired as an employee. This is
precisely true in the case of an independent
contractorship as well as in an agency agreement.
Art 280 is not the yardstick for determining the
existence of an employment relationship because it
merely distinguishes between two kinds of
employees i.e. regular and casual for purposes of
determining the right of an employee to certain
benefits, to join or form a union or to security of
tenure. Art 280 does not apply where the
existence of an employment relationship is in
dispute (compare with Manila Water)
Painting jobs performed we sporadic. The
infrequency or irregularity of assignments
countervails Canonicatos submission that he was
assigned to undertake the task for the whole year
Manila Water Co., Inc. v. Pena, 434 SCRA 52

ACGI was engaged in labor-only contracting and as
such, is considered merely an agent of the
petitioner. In labor-only contracting, the statute
creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention
of labor laws. The contractor is considered merely
an agent of the principal employer and the latter is
responsible to the employees of the labor-only
contractor as if such employees had been directly
employed by the principal employer.
Private resp performed activities which were
necessary or desirable to its principal trade or
business. Thus, they were regular employees of
petitioner regardless of whether the engagement
was merely an accommodation of their request
pursuant to Art. 280 (compare with Far East Bank-
blind employees).
Art. 280: the provisions of written agreement to the
contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be
deemed to be regular where the employee has been
engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer, except where the employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee or where the work or services to be
performed is seasonal in nature and the employment
is for the duration of the season.
Under this provision, the evil sought to be
prevented is singled out: agreements entered into
precisely to circumvent security of tenure. It has no
application where a fixed period of employment
was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper
pressure being brought upon the employee and
absent any circumstances vitiating his consent, or
where it satisfactorily appears that the employer and
employee dealt with each other on more or less
terms with no moral dominance whatever being
exercised by the former over the latter.
Under 279 of LC, an employee who is unjustly
dismissed form work is entitled to reinstatement
without loss of seniority rights and other privileges,
and to his full back wages, inclusive of allowances,
and to his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up to the time
of his actual reinstatement. If reinstatement is no
longer possible, the employer has the alternative of
paying the employee his separation pay in lieu of
Lanzaderas v. Amethyst Security & General
Services, Inc.,

The only time the indirect employer may be
made solidarily liable with the contractor is
when the contractor fails to pay his employees
their wages and other benefits claimed.
Security of tenure, although provided in the
Constitution, does not give an employee an absolute
vested right in a position as would deprive the
company of its prerogative to change their
assignment or transfer them where they will be most
uselful. When a transfer is not unreasonable, nor
inconvenient, nor prejudicial to an employee; and it
doesn not involve a demotion in rank or diminution
of his pay, benefits, and other privileges, the
employee may not complain that it amounts to a
constructive dismissal.
San Miguel Corporation v. Abella, 461 SCRA
392 (2005)

effect of finding: there being a finding of labor-only
contracting, liability must be shouldered by either
SMC (principal) or Sunflower (contractor) or shared
by both. SMC however should be held solely liable
for Sunflower became non-existent with the closure
of the aquaculture of business of SMC (CA reason).
In legitimate labor contracting, the law creates an
employer-employee relationship for a limited
purpose, i.e. to ensure that the employees are paid
their wages. The principal employer becomes
jointly and severally liable with the job contractor,
only for the payment of the employees wages
whenever the contractor fails to pay the same.
Other than that, the principal employer is not
responsible for any claim made by the
In labor-only contracting, the statute creates an
employer-employee relationship for a
comprehensive prupose: to prevent a circumvention
of labor laws. The contractor is considered merely
an agent of the principal employer and the latter is
responsible to the employees of the labor-only
contractor as if such employees had been directly
employed by the principal employer.
Retrenchment is a management prerogative
consistently recognized and affirmed by this Court.
It is, however, subject to faithful compliance with
the substantive and procedural requirements laid
down by law and jurisprudence.
For retrenchment to be considered valid, the
following substantial requirements must be met:
the losses expected should be substantial and not
merely de minimis in extent
substantial losses apprehended must be reasonably
imminent such as can be perceived objectively and
in good faith by the employer
the retrenchment must be reasonably necessary and
likely to effectively prevent the expected losses
the alleged losses, if already incurred, and the
expected imminent losses sought to be forestalled,
must be proved by sufficient and convincing

SMC proved substantial business reverses justifying
retrenchment of its employees
For termination due to retrenchment be valid, the
law requires that written notices of the intended
retrenchment be served by the employer on the
worker and on the DOLE at least 1 month before
the actual date of the retrenchment in order to give
employees some time to prepare for the eventual
loss of their jobs, as well as to give DOLE the
opportunity to ascertain the verity of the alleged
cause of termination.
Where the dismissal is based on an authorized cause
under Art 283 but the employer failed to comply
with the notice requirement, the sanction should be
stiff as the dismissal process was initiated by the
employers exercise of his management prerogative,
as opposed to a dismissal based on a just cause
under 282, because the dismissal is imputable to the
Almodiel v. NLRC, 223 SCRA 341 (1993)

Redundancy for purposes of our Labor Code, exists
where the services of an employee are in excess of
what is reasonably demanded by the actual
requirements of the enterprise. The characterization
of an employees services as no longer necessary or
sustainable, and therefore, properly terminable, was
an exercise of business judgment on the part of the
employer. The wisdom or soundness of such
characterization was not subject to discretionary
review on the part of the LA nor of the NLRC so
long, of course, as violation of law or merely
arbitrary of malicious action is not shown.
In International Macleod vs IAC, it was held that
the determination of the need for the phasing out of
a department as a labor and cost saving device
because it was no longer economical to retain said
services is a management prerogative and the courts
will not interfere with the exercise thereof as long
as no abuse of discretion or merely arbitrary or
malicious action on the part of management is
An employer has a much wider discretion in
terminating employment relationship of managerial
personnel compared to rank and file because
officers in such key positions perform not only
functions which by nature require the employers
full trust and confidence but also functions that spell
the success or failure of an enterprise.
On Alien Employment: a resident alien without a
working permit is not what is prohibited in Art 40.
The provision requires employment permit to non-
resident aliens. The employment permit is required
for entry into the country for employment purposes
and is issued after determination of the non-
availability of a person in the Philippines who is
competent, able and willing at the time of
application to perform the services for which the
alien is desired.
General Milling Corp. v. Torres, 196 SCRA 215

GMCs claim that hiring of a foreign coach is an
employers prerogative has no legal basis. Art. 40
states that an employer seeking employment of an
alien must first obtain an employment permit from
the DOLE. GMCs right to choose is limited by the
statutory requirement of an alien employment
The Labor Code empowers the Secretary to make a
determination as to the availability of the services of
a person in the Philippines who is competent, able
and willing at the time of application to perform the
services for which an alien is desired. DOLE is the
agency vested with jurisdiction to determine the
question of availability of local workers.
Nitto Enterprises v. NLRC, 258 SCRA 654

Art 61 of the LC provides: contents of
apprenticeship agreement. Apprenticeship
agreements, including the main rates of apprentices,
shall conform to the rules issued by the Minister of
Labor and Employment. The period of apprentices
shall not exceed six months. Apprenticeship
agreements providing for wage rates below the legal
minimum wage, which in no case shall start below
75% per cent of the applicable minimum wage, may
be entered into only in accordance with
apprenticeship program duly approved by the
Minister of Labor and Employment. The Ministry
shall develop standard model programs of
It is mandated that apprenticeship agreements
entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship
program duly approved by the Minister of Labor
and Employment.
Prior approval by the DOLE of the proposed
apprenticeship is, therefore, a condition sine qua
non before an apprenticeship agreement can be
validly entered into.
The act of filing the proposed apprenticeship
program with DOLE is a preliminary step towards
its final approval and does not instantaneously give
rise to an employer-apprentice relationship.
Hence, apprenticeship agreement bet petitioner and
private resp has no force and effect in the absence
of a valid apprenticeship program duly approved by
the DOLE.
Art. 280 is cited.
Twin requirements of notice and hearing constitute
the essential elements of due process.
Bernardo v. NLRC & FEBTC, 310 SCRA 186

The Magna Carta for Disabled Persons mandates
that qualified disabled persons be granted the same
terms and conditions of employment as qualified
able-bodied employees. Once they have attained the
status of regular workers, they should be accorded
all the benefits granted by law, notwithstanding
written or verbal contracts to the contrary. This
treatment is rooted not merely on charity or
accommodation, but on justice for all.
The magna carta madates that a qualified disabled
employee should be given the same terms and
conditions of employment as a qualified able-
bodied person. equal opportunity for employment
as provided for by sec. 5.
The fact that the employees were qualified disabled
persons necessarily removes the employment
contracts from the ambit of Art. 80. Since the
Magna Carta accords them the rights of qualified
able-bodied persons, they are thus covered by Art.
The test whether an employee is regular was laid
down in De Leon vs. NLRC:
The primary standard, therefore, of determining
regular employment is the reasonable connection
between the particular activity performed by the
employee in relation to the usual trade or business
of the employer. The test is whether the former is
usually necessary or desirable in the usual business
or trade of the employer. The connection can be
determined by considering the nature of the work
performed and its relation to the scheme of the
particular business or trade in its entirety. Also if
the employee has been performing the job for at
least one year, even if the performance is not
continuous and merely intermittent, the law deems
repeated and continuing need for its performance as
sufficient evident of the necessity if not
indispensability of that activity to the business.
Hence, the employment is considered regular, but
only with respect to such activity, and while such
activity exists.
Accommodated employees: this fact does not
change the nature of their employment. An
employee is regular because of the nature of work
and the length of service, not because of the mode
or even the reason for hiring them.
In LT Datu v NLRC: the determination of whether
employment is casual or regular does not depend on
the will or word of the employer, and the procedure
of hiringxxx but on the nature of the activities
performed by the employee, and to some extent the
length of performance and its continued existence.
The noble objectives of Magna Carta for Disabled
Persons are not based merely on charity or
accommodation, but on justice and the equal
treatment of qualified persons, disabled or not.

Manila Terminal Co. Inc. v. CIR, 91 Phil. 625

The Association cannot be said to have impliedly
waived the right to overtime compensation, for the
obvious reason that they could not have expressly
waived it.
Principle of laches and estoppel cannot be invoked:
It would be contrary to the spirit of the Eight-Hour
Labor Law, under which, as already seen, the
laborers cannot waive their right to extra
The law principally obligates the employer to
observe it, so much so that it punishes the employer
for its violation and leaves the employee or laborer
free and blameless.
The employee or laborer is in such a
disadvantageous position as to be naturally reluctant
or even apprehensive in asserting any claim which
may cause the employer to devise a way for
exercising his right to terminate the employment.
If laches and estoppel will be applied, it may bring a
situation whereby the employee or laborer who
cannot expressly renounce their right to extra
compensation under the Eight-Hour Labor Law,
may be compelled to accomplish the same thing by
mere silence of lapse of time, thereby frustrating the
purpose of the law by indirection.
The public is interested in the strict enforcement of
the Eight-Hour Labor Law. This was designed not
only to safeguard the health and welfare of the
laborer or employee, but in a way to minimize
unemployment by forcing employers in cases where
more than 8-hour operation is necessary, to utilize
different shifts of laborers or employees working
only for eight hours each.

Charlito Peranda v. Baganga Plywood Corp., et
al., G.R. 159577, May 3, 2006
Managerial employees and members of the
managerial staff are exempted from the provisions
of the Labor Code on labor standards. Since
petitioner belongs to this class of employees, he is
not entitled to overtime pay and premium pay for
working on rest days.
Managerial employees are those whose primary
duty consists of the management of the
establishment in which they are employed or of a
department of subdivision.
Sec. 2(c) of the Implementing Rules of LC, Book
III, Rule I defines members of a managerial staff
as those with the following duties and
The primary duty consists of the performance of
work directly related to management policies of the
Customarily and regularly exercises discretion and
independent judgment.
i. Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists
of the management of the establishment in which he
is employed or subdivision thereof; or
ii. execute under general supervision work along
specialized or technical lines requiring special
training, experience, or knowledge;
iii. execute under general supervision special
assignment and tasks
Who do not devote more than 20 percent of their
hours worked in a workweek to activities which are
not directly and closely related to the performance
of the work described in paragraphs (1), (2) and (3)
He admitted that he was a supervisor and his work
necessarily required the use of discretion and
independent judgment to ensure the proper
functioning of the steam plant boiler.
As a supervisor, he is deemed a member of the
managerial staff.
Asia Pacific Christening, Inc. v. Farolan, 393
SCRA 454 (2004)

Requisites for a valid dismissal of an employee is
thus in order, to wit:
the employee must be afforded due process i.e. he
must be given opportunity to be heard and to defend
dismissal must be for a valid cause as provided in
art 282 of LC or any of the authorized causes under
283 and 284 of the same Code
The rule is settled that in termination cases, the
employer bears the onus of proving that the
dismissal is for just cause failing which the
dismissal is not justified and the employee is
entitled to reinstatement.
Treatment to managerial employees:
Thus with respect to rank and file personnel, loss
of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events
in question and that mere uncorroborated assertions
and accusations by the employer will not be
sufficient. But as regards a managerial employee,
mere existence of a basis for believing that such
employee has breached the trust of his employer
would suffice for his dismissal.
Samson vs NLRC: Before one may be properly
considered a managerial employee, all the
following conditions must be met:
Their primary duty consists of the management of
the establishment in which they are employed or of
a department or subdivision thereof;
They customarily and regularly direct the work of
two or more employees therein;
They have the authority to hire or fire other
employees of lower rank, or their suggestions and
recommendations as to the hiring and firing and as
to the promotion or any other change of status of
other employees are given particular weight. (SEC
2(b) Rule I, Book III of the Omnibus)
In Paper Industries Corp vs Laguesma:
Managerial employees are ranked as Top Mangers,
Middle Mangers and First Line Managers. The mere
fact that an employee is designated as manager does
not ipso factor make him onedesignation should
be reconciled with the actual job description of the
employee for it is the job description that
determines the nature of employment.
The absence of a written job description or
prescribed work standards, however, leaves this
court in the dark.
Loss of confidence should have a basis and
determination thereof cannot be left entirely to the
Loss of trust and confidence to be a valid ground for
an employees dismissal must be based on a willful
breach and founded on clearly established facts. A
breach is willful if it is done intentionally,
knowingly and purposely, without justifiable
excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly, and
Failure to observe prescribed standards of work, or
to fulfill reasonable work assignments due to
inefficiency may be just cause for dismissal but it
must be shown what standards of work or
reasonable work assignment were prescribed which
respondent failed to observe not that if she did fail
to observe any such, it was due to inefficiency.
While an employee may be dismissed because of
inefficiency, neglect or carelessness, the law implies
a situation or undertaking by an employee in
entering into a contract of employment that he is
competent to perform the work undertaken and is
possessed of the requisite skill and knowledge to
enable him to do so, and that he will do the work of
the employer in a careful manner. If he is not
qualified to do the work which he undertakes, if he
is incompetent, unskillful or inefficient, or if he
executes his work in a negligent manner or is
otherwise guilty of neglect of duty, he may lawfully
be discharged before the expiration of his term of
On moral damages: it must be shown that the
dismissal was attended by bad faith or constituted
an act opposite to labor or was done in a manner
contrary to morals, good customs, or public policy.
Award of moral damages and exemplary damages
for an illegally dismissed employee is proper where
the employee had been harassed and arbitrarily
terminated by the employer.
Merdicar Fishing Corp v. NLRC, 297 SCRA 440

Art. 82 provides that the Title Working Conditions
and Rest period Provisions of the LC shall not apply
government employees
field personnel
members of the family of the employer who are
dependent on him for support
domestic helpers
persons in the personal service of another
workers who are paid by results as determined by
the Sec of Labor
Field personnel shall refer to non-agricultural
employees who regularly perform their duties away
from the principal place of business or branch office
of the employer and whose actual hours of work in
the filed cannot be determined with reasonable
Rule IV, Sec. 1 (e), Book III of the IRR states
Field personnel and other employees whose time
and performance is unsupervised by the
The latter provision did not add another element to
the LC but merely interpreted and expounded the
clause of the provision of the LC.
Fishermen employed by petitioner have no choice
but to remain on board its vessel. Although they
perform non-agricultural work away from
petitioners buiness offices, the fact remains that
throughout the duration of their work, they are
under the effective control and supervision of
petitioner through the vessels patron or master.
On abandonment: To constitute abandonment, there
must be concurrence of the intention to abandon and
some overt acts from which it may be inferred that
the employee concerned has no more interest in
The filing of complaint which asked for
reinstatement plus backwages is inconsistent with
resp defense of abandonment.
Auto Bus Transport Systems, Inc. v. Bautista,
458 SCRA 578 (2005)

Art. 95 of the LC vis--vis Sec 1(d), RULE V, Book
III of the IRR which provides:
Art. 95: Right to Service Incentive Leave
Every employee who has rendered at least one year
of service shall be entitled to a yearly service
incentive leave of five days with pay.
And Sec 1(d) provides that: Field personnel and
other employees whose performance is
unsupervised by the employer includeing those who
are engaged on task or contract basis, purely
commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time
consumed in the performance thereof;
Amplification of the LC.
Same is true to the phrase those who are engaged o
task or contract basis, purely commission basis
should be related with field personnel applying the
rule on ejusdem generis that general and unlimited
terms are restrained and limited by the particular
terms that they follow.
Bureau of Working Conditions (BWC), Advisory
As a general rule, field personnel are those whose
performance of their job/service is not supervised
by the employer or his rep, the workplace being
away from the principal office and whose hours and
days of work cannot be determined with reasonable
certainty, hence they are paid specific amount for
rendering specific service or performing specific
work. If required to be at specific places at specific
times, employees including drivers cannot be said to
be field personnel despite the fact that they are
performing work away from the principal office of
the employee.
In order to conclude whether an employee is a field
employee, it is also necessary to ascertain if actual
hours of work in the filed can be determined with
reasonable certainty by the employer. In so doing,
an inquiry must be made as to whether or not the
employees time and performance are constantly
supervised by the employer.
Dispatcher: function is precisely to see that the bus
and its crew leave the premises at specific times and
arrive at the estimated proper time.
On prescription: LC provides that all money claims
arising from er-ee rel shall be filed within 3 years
from the time the cause of action accrued;
otherwise, they shall be forever barred.
In case of nonpayment of allowances and other
monetary benefits, if it is established that the
benefirs being claimed have been withheld from the
employee for a period longer than 3 yrs, the amount
pertaining to the period beyond the three-year
prescriptive period is therefore barred by
prescription. The amount that can only be
demanded by the aggrieved employee shall be
limited to the amount of the benefits withheld
within 3 years before the filing of the complaint. (In
the computation of the prescriptive period,
determine when the act constituting the violation
was committed).
On service incentive when does the prescriptive
period commence?
Service incentive is a curious animal. The employee
may commute his accrued incentive leave upon his
resignation or separation frm work.
Sec 2, Rule V, Book III: Service incentive leave is a
right which accrues to every employee who has
served within 12 months, whether continuous or
broken reckoned from the date the employee started
working, including authorized absences and paid
regular holidays unless the working days in the
establishment as a matter of practice or policy, or
that provided in the employment contract, is less
than 12 months, in which case said period shall be
considered as one year.
It is commutable to its money equivalent if not used
or exhausted at the end of the year. In other words,
the employee who has served for one year is
entitled to it. He may use it as leave days or he may
collect its monetary value.
The three-year prescriptive period commences, not
at the end of the year when the employee becomes
entitled to the commutation of his service incentive
leave, but from the time the employer refuses to pay
its monetary equivalent after demand of
commutation or upon termination of the employees
services as the case may be.

Labor Congress v. NLRC, 290 SCRA 509 (1998)

Battad: Determine whether the employer is using
piece-rate worker status to evade liability as to the
benefits to which such workers are exempted. This
is similar to labor-only vs. independent contractor
where factors are to be considered before we could
establish which is the true status of the employees

Are the piece-rate workers entitled to overtime pay,
month pay, backwages, separation pay?
Procedural aspect: Notice of dismissal is required
Sec. 2, Rule XIV, Book V of IRR. If not complied
then, Art. 279 as amended by RA 6715 shall apply.
The backwages of piece-rate workers are to be
determined by the NLRC because there is a need to
determine the varying degrees of production and
days worked by each worker.
In this case, they are regular employees because of
the presence of these three factors:
nature of petitioners tasks: their job of repacking
snack food was necessary or desirable in the usual
business of private respondents, who were engaged
in the manufacture and selling of such food
petitioners worked for private respondents
throughout the year, their employment not having
been dependent on a specific project or season
length of time that the petitioners worked for private
While petitioners mode of compensation was on a
per piece basis the status and nature of their
employment was that of regular employee.
The IRR exclude certain employees from receiving
benefits such as nighttime pay, holiday pay, service
incentive leave, and 13
month pay. Petitioners as
piece-rate workers do not fall within this group. Not
only did petitioners labor under the control of
private respondents as their employer, likewise did
petitioners toil throughout the year with the
fulfillment of their quota as supposed basis for
Sec 8(b) Rule IV, Book II provides for holiday pay
of certain employees.
Revised Guidelines on the Implementation of the
Month Pay law, exclude employer of piece-rate
workers from those exempted from paying the 13

month pay.
Employers still not covered by PD 851: (d)
Employers of those who are paid on purely
commission, boundary or task basis, and those who
are paid a fixed amount for performing specific
work, irrespective of the time consumed in the
performance thereof, except where the workers
are paid on piece-rate basis in which case, the
employer shall grant the required 13
pay to such workers.
Revised Guidelines: Workers who fall under the
piece-rate category: who are paid a standard amount
for every piece or unit of work produced that is
more or less regularly replicated without regard to
the time spent in producing the same.
As to the overtime pay: Sec 2(e) Rule I, Book III
compare with Sec. 8, Rule VII, Book III.
If the employer adhered to Sec. 8 where the Sec of
Labor would fix rates, then they are exempted.
But employer did not allege adherence, thus sec
2(e) workers who are paid by results, including
those who are paid on piece-work, takay, pakiao, or
task basis but their employer did not comply with
Sec. 8 to fall within the exception, then they are
entitled to overtime pay.
Philippine Airlines, Inc. v. NLRC, 302 SCRA 582

Art. 83-Normal Hours of Work, Art. 85, Meal
Periods, Sec. 7, Rule I, Book III read together.
The eight-hour work period does not include the
meal break. Nowhere in the law may it be inferred
that employees must take their meals within the
company premises. Employees are not prohibited
from going out of the premises as long as they
return to their posts on time.
On moral damages: Bad faith involves a state of
mind dominated by ill will or motive. It implies a
conscious and intentional design to do a wrongful
act for a dishonest purpose of some moral obliquity.
Art. 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work. The normal
hours of work of any employee shall not exceed
eight (8) hours a day.
Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least
one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the
exigencies of the service require that such personnel
work for six (6) days or forty-eight (48) hours, in
which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of
their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall
include: resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, laboratory
technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic
personnel. (emphasis supplied)
Art. 85. Meal periods. Subject to such
regulations as the Secretary of Labor may prescribe,
it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off
for their regular meals.
Sec. 7, Rule I, Book III of the Omnibus Rules
Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods. Every employer
shall give his employees, regardless of sex, not less
than one (1) hour time-off for regular meals, except
in the following cases when a meal period of not
less than twenty (20) minutes may be given by the
employer provided that such shorter meal period is
credited as compensable hours worked of the
(a) Where the work is non-manual work in nature or
does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not
less than sixteen hours a day;
(c) In cases of actual or impending emergencies or
there is urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious
loss of perishable goods.
Rest periods or coffee breaks running from five (5)
to twenty (20) minutes shall be considered as
compensable working time.
Arica v. NLRC, 170 SCRA 776 (1989)

The thirty (30)-minute assembly time long practiced
and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as
waiting time within the purview of Section 5, Rule
I, Book III of the Rules and Regulations
Implementing the Labor Code. ..
.Furthermore, the thirty (30)-minute assembly is a
deeply- rooted, routinary practice of the employees,
and the proceedings attendant thereto are not
infected with complexities as to deprive the workers
the time to attend to other personal pursuits. They
are not new employees as to require the company to
deliver long briefings regarding their respective
work assignments. Their houses are situated right
on the area where the farm are located, such that
after the roll call, which does not necessarily require
the personal presence, they can go back to their
houses to attend to some chores.
In short, they are not subject to the absolute
control of the company during this period,
otherwise, their failure to report in the assembly
time would justify the company to impose
disciplinary measures. The CBA does not
contain any provision to this effect; the record is
also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty
(30)-minute assembly time was not primarily
intended for the interests of the employer, but
ultimately for the employees to indicate their
availability or non-availability for work during
every working day.

University of Pangasinan Faculty Union v.
University of Pangasinan, 127 SCRA 691 (1984)

No work no pay principle does not apply in the case
because the petitioners certainly do not ad
voluntatem absent themselves during semestral
breaks. Rather, they are constrained to take
mandatory leave from work.
Intention of the law to grant ECOLA upon the
payment of basic wages. No pay, no ECOLA. But
petitioners were paid their wages in full for the
months of Nov and Dec notwithstanding the
intervening semestral break.
Sec. 4 of the Omni:
Principles in Determining Hours Woked: (d) The
time during which an employee is inactive by
reason of interruptions in his work beyond his
control shall be considered time either if the
imminence of the resumption of work requires the
employees presence at the place of work or if the
interval is too brief to be utilized effectively and
gainfully in the employees own interest.
Semestral break may also be considered as hours
Sec. 3 of PD 451 on increase on tuition or other
school fees conditions.
In University of the East vs UE Faculty Assoc: In
effect, the problem posed before Us is whether or
not the reference in Sec 3(a) to increase in salaries
or wages of the faculty and all other employees of
the schools concerned as the first purpose to which
the incremental proceeds from authorized increases
to tuition fees may be devoted, may be construed to
include allowances and benefits. In the negative,
which is the position of resp, it would follow that
such allowances must be taken from resources of
the school not derived from tuition fees. Xxx We
note that among the items of the second purpose
stated in provision in question is return in
investment. And the law provides only for the
maximum, not a minimum. In other words, the
schools may get a return to investment of not more
than 12% but if circumstances warrant, there is no
minimum fixed by law which they should get.
If the schools happen to have no other resources to
grant allowances and benefits, either mandated by
law or secured by collective bargaining, such
allowances and benefits should be charged against
the return to investments referred to in the second
purpose stated Sec 3(a).
The law provides that 60% should go to wage
increases and 40% to institutional developments,
student assistance, extension services and return on
investments (ROI). Under the law, the last item ROI
has flexibility sufficient to accommodate other
purposes of the law and the needs of the university.
ROI is not set aside for any one purpose of the
university such as profits or returns on investments.
Besides, ROI is a return or profit over and above the
operating expenditures of the university, and still,
over and above the profits it may have had prior to
the tuition increase.

Rada v. NLRC, 205 SCRA 69 (1992)
- Sandoval Shipyards, Inc. vs. National Labor
Relations Commission, et al.
is applicable to the
case at bar. Thus:
We hold that private respondents were project
employees whose work was coterminous with the
project or which they were hired. Project
employees, as distinguished from regular or non-
project employees, are mentioned in section 281 of
the Labor Code as those "where the employment
has been fixed for a specific project or undertaking
the completion or termination of which has been
determined at the time of the engagement of the
Policy Instructions No. 20 of the Secretary of
Labor, which was issued to stabilize employer-
employee relations in the construction industry,
Project employees are those employed in
connection with a particular construction project.
Non-project (regular) employees are those
employed by a construction company without
reference to any particular project.
Project employees are not entitled to termination
pay if they are terminated as a result of the
completion of the project or any phase thereof in
which they are employed, regardless of the number
of projects in which they have been employed by a
particular construction company. Moreover, the
company is not required to obtain clearance from
the Secretary of Labor in connection with such
- A non-project employee is different in that the
employee is hired for more than one project. A non-
project employee, vis--vis a project employee, is
best exemplified in the case of Fegurin vs NLRC:
Considering the nature of the work of petitioners,
that of carpenter, laborer or mason, their respective
jobs would actually be continuous and on-going.
When a project to which they are individually
assigned is completed, they would be assigned to
the next project or a phase thereof. In other words,
they belonged to a "work pool" from which the
company would draw workers for assignment to
other projects at its discretion. They are, therefore,
actually "non-project employees."
From the foregoing, it is clear that petitioner is a
project employee considering that he does not
belong to a "work pool" from which the company
would draw workers for assignment to other
projects at its discretion. It is likewise apparent
from the facts obtaining herein that petitioner was
utilized only for one particular project, the MNEE
Stage 2 Project of respondent company. Hence, the
termination of herein petitioner is valid by reason of
the completion of the project and the expiration of
his employment contract.

Social Security System v. Court of Appeals, 348
SCRA 1 (2000)
Testimony of other laborers
Records of business affairs
Power of control
On SSS: The mandatory coverage under the SSS
Law (Republic Act No. 1161, as amended by PD
1202 and PD 1636) is premised on the existence of
an employer-employee relationship, and Section
8(d) defines an employee as any person who
performs services for an employer in which either
or both mental and physical efforts are used and
who receives compensation for such services where
there is an employer-employee relationship. The
essential elements of an employer-employee
relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the power of control
with regard to the means and methods by which the
work is to be accomplished, with the power of
control being the most determinative factor.
On Payroll: Where the veracity of the alleged
documents as payrolls are doubtful considering that
the laborers named therein never affixed their
signatures to show that they actually received the
amounts indicated corresponding to their names, the
fact that a particular laborers name does not appear
in the payrolls is no proof that he did not work in
the workplace.
On Testimony of other laborers: The testimonies of
other laborers who did not waver in their assertion
on certain facts of another laborers employment
prevail over the incomplete and inconsistent
documentary evidence of the employer; where the
employer-employee relationship was sufficiently
proved by testimonial evidence, the absence of time
sheet, time record or payroll becomes
inconsequential. No particular form of evidence is
required to prove the existence of an employer-
employee relationship. Any competent and
relevant evidence to prove the relationship may
be admitted.
Records of business affairs: The employer is duty-
bound to keep faithful and complete records of his
or her business affairs, not the least of which would
be the salaries of the workers. Documents presented
in this case have been selective, few and incomplete
in substance and content, thus employer failed to
convince the court that husband of petitioner was
not its employee.
Power of Control: The power of control refers
merely to the existence of the powerit is not
essential for the employer to actually supervise the
performance of duties of the employee, as it is
sufficient that the former has a right to wield the
power. In this case, the employer has an overseer to
whom the employer wielded the power to hire or
dismiss, to check on the work, be it in progress or
quality of the laborers.
Shell Oil Co. of the Philippines, Ltd. v. National
Labor Union, 81 Phil. 315 (1948)
Nightwork has almost invariably been looked upon
with disfavor by students of the problem because of
the excessive strain involved, especially for women
and young persons, the large amount of lost time
consequent upon exhaustion of the workers, the
additional strain and responsibility upon the
executive staff, the tendency of excessively fatigued
workers to "keep going" on artificial stimulants, the
general curtailment of time for rest, leisure, and
cultural improvement, and the fact that night
workers, although precluded to an extent from the
activities of day life, do attempt to enter into these
activities, with resultant impairment of physical
well-being. It is not contended, of course, that
nightwork could be abolished in the continuous-
process industries, but it is possible to put such
industries upon a three- or four-shifts basis, and to
prohibit nightwork for women and children.
(Labor's Progress and Problems, Vol. I, p. 464, by
Professors Millis and Montgomery.)
Nightwork cannot be regarded as desirable, either
from the point of view of the employer or of the
wage earner. It is uneconomical unless overhead
costs are unusually heavy. Frequently the scale of
wages is higher as an inducement to employees to
accept employment on the night shift, and the rate
of production is generally lower. (Management of
Labor Relations, by Watkins & Dodd, pp. 522-524;
emphasis ours.)
Nightwork. Civilized peoples are beginning to
recognize the fact that except in cases of necessity
or in periods of great emergency, nightwork is
socially undesirable. Under our modern industrial
system, however, nightwork has greatly aided the
production of commodities, and has offered a
significant method of cutting down the ever-
increasing overhead costs of industry. This result
has led employers to believe that such work is
necessary and profitable. Here again one meets a
conflict of economic and social interests. Under
these circumstances it is necessary to discover
whether nightwork has deleterious effects upon the
health of laborers and tends to reduce the ultimate
supply of efficient labor. If it can proved that
nightwork affects adversely both the quality and
quantity of productive labor, its discontinuance will
undoubtedly be sanctioned by employers. From a
social point of view, even a relatively high degree
of efficiency in night operations must be forfeited if
it is purchased with rapid exhaustion of the health
and energy of the workers. From an economic point
of view, nightwork may be necessary if the
employer is to meet the demand for his product, or
if he is to maintain his market in the face of
increasing competition or mounting variable
production costs.

Wellington Investment Inc. v. Trajano, 245
SCRA 561 (1995)

Issue: WON a monthly-paid employee, receiving a
fixed monthly compensation, is entitled to an
additional pay aside from his usual holiday pay,
whenever a regular holiday falls on a Sunday.

Held: Yes. Every worker should be paid his regular
daily wage during regular holidays even if the
worker does no work on these holidays (except in
retail and service establishments regularly
employing less than 10 workers.

This is also applicable in the event of the
declaration of any special holiday, or any fortuitous
cause precluding work on any particular day or
days, the employee is entitled to the salary for the
month and the employer has no right to deduct the
proportionate amount corresponding to the days
when no work was done. The monthly
compensation is evidently intended precisely to
avoid computations and adjustments resulting from
the contingencies just mentioned which are
routinely made in the case of workers paid on daily

Wellington used 314 factor = it simply deducted 51
Sundays from the 365 days. The monthly salary
thus fixed actually covers payment for 314 days of
the year including regular and special holidays,
as well as days when no work is done by reason
of fortuitous cause, as above specified, or causes
not attributable to the employees.

There is no provision of law requiring any employer
to make such adjustments in the monthly salary rate
set by him to take account of legal holidays falling
on Sundays in a given year, or contrary to the legal
provisions bearing on the point, otherwise to reckon
a year at more than 365 days.

The legal provisions governing monthly
compensation are evidently intended precisely to
avoid recomputations and alteration in salary on
account of the contingencies just mentioned, which,
by way are routinely made between employer and
employees when the wages are paid on daily basis.

San Miguel Corp. v. Court of Appeals, 375
SCRA 311 (2002)

Facts: Underpayment of SMC of regular Muslim
holiday pay to its employees. Should this be applied
to non-Muslim employees?


Yes. Art. 2 of the PD 1083 provides that the
provisions of this Coude shall be applicable only to
Muslims xxx. However, there should be no
distinction between Muslims and non-Muslims as
regards payment of benefits for Muslim holiday.

We must remind the respondent-appellant
(employer) that wages and other emoluments
granted by law to the working man are determined
on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or
religen. Art. 3 also declares that nothing herein
shall be construed to operate to the prejudice of a
Philippine Fisheries Development Authority v.
NLRC, 213 SCRA 621 (1992)

Issue 1: WON an indirect employer is bound by the
ruling of NLRC which made the indirect employer
liable when the guards are not employees of the
petitioner because the contract of services explicitly
states that the security guards are not their
employees thus, no employer-employee
relationship, thus the jurisdiction of the CSC may
not be invoked in this case.


Notwithstanding that the petitioner is a government
agency, its liabilities, which are jointly and solidary
with that of the contractor are provided in Art. 106,
107 and 109.
Its liabilities are under the NLRC scope and in
addition, book three title ii on wages provides that
the term employer includes any person acting
directly or indirectly in the interest of an
employer in relation to an employee and shall
include the Government and all its branches,
subdivisions and instrumentalities, all GOCCs
and institutions as well as non-profit private
institutions or organizations.

Issue 2: Who should carry the burden of the wage


It is settled that in job contracting, the petitioner as
principal is jointly and severally liable with the
contractor for the payment of unpaid wages. In the
case at bar, the action was for the payment of
unpaid wage differentials under Wage Order No. 6.

In the case of Eagle Security vs. NLRC:

The solidary liability of PTSI and EAGLE,
however, does not preclude the right of
reimbursement from his co-debtor by the one who
paid. It is with respect to this right of
reimbursement that petitioners can find support in
the aforecited contractual stipulation and Wage
Order provision.

The Wage Orders are explicit that the payment of
the increases are to be borne by the principal or
client. To be borne, however, does not mean that
the principal, PTSI in this case, would directly pay
the security guards the wage and allowance
increases because there is no privity of contract
between them. The security guards contractual
relationship is with their immediate employer,
EAGLE. As an employer, EAGLE is tasked, among
others, with the payment of their wages.

Premises considered, the security guards
immediate recourse for the payment of the increases
is with their direct employer, EAGLE. However, in
order for the security agency to comply with the
new wage and allowance rates it has to pay the
security guards, the Wage Order made specific
provision to amend existing contracts for security
services by allowing the adjustments of the
consideration paid by the principal to the security
agency concerned. What the Wage orders require,
therefore, is the amendment of the contract as to the
consideration to cover the service contractors
payment of the increases mandated. In the end,
therefore, ultimate liability for the payment of the
increasees rests with the principal.

The Wage Orders are statutory and mandatory and
can not be waived. The petitioner can not escape
liability since the law provides the joint and solidary
liability of the principal and the contractor for the
protection of the laborers.

But the Court here did not apply the Eagle case
because the petitioner is equally guilty by not
abiding to the law in the subsequent change of
contract even when the WO6 was already

Therefore, security guards immediate recourse is
with direct employer but the latter is not prejudiced
as to the claim of of the wages it shall give the

Doctrine: Principal liable for Wage Orders
mandating wage increases. But when principal
cannot pay, contractor is the immediate recourse
and should pay the whole claim with right to
reimbursement from principal. But if contractor is at
fault, will be liable to of the claim.

Aklan Electric Corp., Inc. v. NLRC, 323 SCRA
259 (2000)


Employees working at Lezo but were told to
transfer to Kalibo but they did not transfer.
Claiming salaries, wages and benefits.

Issue: WON they are entitled to salaries and

Held: No. The employer gave orders to the
employees to transfer office because of the dangers
the environment poses to the company, yet the
employees disobeyed. Moreover, the transfer of
office was approved by NEA Administrator in its
exercise of supervision and control over all electric
cooperatives. When the business transferred, what
was left to the employees to work on? Thus no basis
that the employees continued to report for work in

The age-old rule governing the relation between
labor and capital, or management and employee of a
fair days wage for a fair days labor remains
as the basic factor in determining employees
wages. If there is no work performed by the
employee there can be no wage or pay unless, of
course, the laborer was able, willing and ready to
work but was illegally locked out, suspended or
dismissed, or otherwise illegally prevented from
working, a situation we find is not present in the
instant case. It would neither be fair nor just to
allow private respondents to recover something they
have not earned and could have not earned because
they did not render services at the Kalibo office
during the stated period.

Bankard Employers Union v. NLRC, 423 SCRA
148 (2004)


Petitioners questioning the new salary increase to
new employees which were higher than the regular
employees. They claim that there was wage
distortion, thus the request for an across-the-board

Held: No wage distortion.

Wage distortion: a situation where an increase in
prescribed wage rates results in the elimination or
severe contraction of intentional quantitative
differences in wage or salary rates between and
among employee groups in an establishment as to
effectively obliterate the distinctions embodied in
such wage structure based on skills, length of
service, or other logical bases of differentiation.

Four elements of wage distortion (Prubnkers

An existing hierarchy of positions with
corresponding salary rates
A significant change in the salary rate of a lower
pay class without a concomitant increase in the
salary rate of a higher ones
The elimination of the distinction between the two
levels and
The existence of the distortion in the same region of
the country.

In a problem dealing with wage distortion, the
basic assumption is that there exists a grouping or
classification of employees that establishes
distinctions among them on some relevant or
legitimate bases.

The NLRC refutes the petitioners contention that
the basis of the levels of classification is the length
of service. It stated that, to determine the existence
of wage distortion, the historical classification of
the employees prior to the wage increase must be
established. It must be shown that as between the
different classification of employees, there exists a
historical gap or difference.

Thus the employees of private respondent have
been historically classified into levels i.e. I to V
and not on the basis of their length of service. The
entry of new employees to the company ipso facto
places them under any of the levels. There is no
hierarchy of positions between the newly hired and
regular employees, thus the first element is wanting.

Apart from the finding of fact of the NLRC and Ca
that some of the elements of wage distortion are
absent, the petitioner cannot legally obligate
Bankard to correct the alleged wage distortion as
the increase in the salaries of the newly-hired was
not due to a prescribed law or wage order.

Art. 124 should be construed and correlated in
relation to minimum wage fixing, the intention of
the law being that in the event of ancrease in
minimum wage, the distinctions embodies in the
wage structure based on skills, length of service or
other logical bases of differentiation will be

If the compulsory mandate under Art. 124 to correct
wage distortion is applied to voluntary and
unilateral increases by the employer in fixing hiring
rates which is inherently a business judgment
prerogative, then the hands of the employer would
be completely tied even in cases where an increase
in wages of a particular group is justified due to a
re-evaluation of the high productivity or a particular
group, or as in the present case, the need to increase
the competitiveness of Bankards hiring rate.

The mention of Metro Transit case was misplaced
where it did not confine to wage distortion resulting
from government decreed law or wage order
because the rectification in that case was not by
virtue of Art. 124 of the Labor Code but by the
existing company practice that whenever rank-and-
file employees were paid a statutorily mandated
salary increase, supervisory employees were, as a
matter of practice, also paid the same amount plus
an added premium.

Wage distortion is a factual and economic condition
that may be brought by different causes. The mere
factual existence of wage distortion does not,
however, ipso facto result to an obligation to
rectify it, absent a law or other source of
obligation which requires its rectification.

Moreover, in this case, the CBA between the Union
and Management gives the Company the right to
establish such minimum salaries as it may hereafter
find appropriate for specific jobs and to adjust the
rates of the employees thereby affected xxx.

Arms Taxi v. NLRC, 219 SCRA 306 (1993)


Taxi driver Culla was dismissed by forcing open his
quarters and removing his personal belongings
found therein and bringing them to his residence.

He is claiming reinstatement with backwages, plus
commission of 15% of the gross income of the taxi
business which is the issue at bar.

Held: No. He cannot get the 15% commission. If it
were true that there had been an agreement
regarding the payment of a 15% commission to
him, Culla would have not waited almost 6 years to
claim it. Considerably delay in asserting ones right
is strongly persuasive of the lack of merit of ones

SOLGEN: Salary is different from a commission.
The defense that the giving of salary is a partial
compliance to pay a commission of percentage.
While a salary is a fixed compensation for regular
work or for continuous service rendered over a
period of time, a commission is a percentage or
allowance made to a factor or agent for transacting
business for another. Thus, before invoking the
exception to the Statute of Frauds, petitioner should
have proven that he had received a commission, or
part of it, in the past.

Iran v. NLRC, 289 SCRA 433 (1998)

The case where the salesman and truck helpers
received commission for cases sold. Then there
were irregularities and the respondents were
prompted to report cash shortages. After a few days,
they stopped reporting for work, thus the conclusion
of abandonment. Terminated without notice.

On the other hand, complain for illegal dismissal,
deduction, underpayment of wages, premium pay
for holiday and rest day, holiday pay, incentive pay,


WON commissions in the computation of wages
must only be paid after the minimum wage has been
paid, thus excluding commissions in the
computation for benefits which rely on wage.

Held: No.

The Court has taken judicial notice of the fact that
some salesman do not receive any basic salary but
depend entirely on commissions and allowances or
commissions alone, although an employer-
employee relationship exists.

This salary structure is intended for the benefit of
the corporation establishing such, on the apparent
assumption that thereby its salesmen would be
moved to greater enterprise and diligence and close
more sales in the expectation of increasing their
sales commission. But this does not detract from the
character of such commissions as part of the salary
or wage paid to each of its salesmen for rendering
services to the corporation.

There is no law mandating that commissions be
paid only after the minimum wage has been paid to
the employee. Verily, the establishment of a
minimum wage only sets a floor below which an
employees remuneration cannot fall, not that
commissions are excluded from wages in
determining compliance with the minimum wage

In one case it was acknowledged that drivers and
conductors who are compensated purely on a
commission basis are automatically entitled to the
basic minimum pay mandated by law should said
commission be less than their basic minimum for
eight hours work. It can thus be inferred that where
said commissions equal to or even exceed the
minimum wage, the employer need not pay, in
addition, the basic minimum pay prescribed by law.
It follow then that commissions are included in
determining compliance with minimum wage
Philippine Association of Service Exporters v.
Drilon (1988)
J . Sarmiento


The petitioner, Philippine Association of Service
Exporters, Inc. (PASEI, for short), a firm "engaged
principally in the recruitment of Filipino workers,
male and female, for overseas placement,"

challenges the Constitutional validity of Department
Order No. 1, Series of 1988, of the Department of
Labor and Employment, in the character of
petition for certiorari and prohibition.


It is an unlawful exercise of police power since this
is a power that belongs to the legislative branch not
the executive department; and violates the right to
travel and impairs the right to contract.
Equal Protection clause violation discriminates
against women and does not apply to all workers
but on to DH.
It violates Section 3, of Article XIII, of the
Constitution, providing for worker participation "in
policy and decision-making processes affecting
their rights and benefits as may be provided by

Decision: The directive was upheld


The department order is a valid exercise of
police power.
Police power is one of the three inherent powers of
the state, along with taxation and eminent domain
that is not written anywhere in the constitution (Im
not sure if this addresses the argument that the said
power pertains to the legislative branch not the
executive branch; that issue was not specifically
tackled by the Court)
It is defined as the "state authority to enact
legislation that may interfere with personal liberty
or property in order to promote the general
welfare." (Edu v. Ericta) As defined, it consists of
(1) an imposition of restraint upon liberty or
property, (2) in order to foster the common good.
Its scope, ever-expanding to meet the exigencies
of the times, even to anticipate the future where it
could be done, provides enough room for an
efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits."
(Edu v. Ericta)
Nevertheless, its exercise would be invalid if the
same is arbitrary, unreasonable and oppressive.
As a general rule, official acts enjoy a presumption
of validity. In view of petitioners failure to prove
that the law is oppressive, the presumption stands.

The right to travel may be validly limited in the
exercise of police power. The right to travel is
subject, among other things, to the requirements of
"public safety," "as may be provided by law." (Art
III Sec. 6) Department Order No. 1 is a valid
implementation of the Labor Code, in particular, its
basic policy to "afford protection to labor,"
pursuant to the respondent Department of Labor's
rule-making authority vested in it by the Labor

The non-impairment clause of the Constitution,
invoked by the petitioner, must yield to the
loftier purposes targetted by the Government.
Freedom of contract and enterprise, like all other
freedoms, is not free from restrictions, more so in
this jurisdiction, where laissez faire has never been
fully accepted as a controlling economic way of

The Equal Protection Clause is not impaired.
Equality of the law xxx does not import a perfect
identity of rights among men and women. It allows
classification, provided that (1) such classifications
rest on substantial distinctions; (2) they are
germane to the purposes of the law; (3) they are
not confined to existing conditions; and (4) they
apply equally to all members of the same class.
(People v. Cayat)

On 1
element: There is a valid basis for singling
out women. As a matter of judicial notice, the Court
is well aware of the unhappy plight that has befallen
our female labor force abroad, especially domestic
servants, amid exploitative working conditions
marked by, in not a few cases, physical and
personal abuse. This is not to say that men do not
suffer the same abuses, however, those are isolated
On 2
element: The classification is germane to
the purpose of the directive. Unquestionably, it is
the avowed objective of Department Order No. 1 to
"enhance the protection for Filipino female overseas
workers" This Court has no quarrel that in the midst
of the terrible mistreatment Filipina workers have
suffered abroad, a ban on deployment will be for
their own good and welfare.
On 3
element: The measure will only be in place
until the working environment for DHs becomes
better. Accordingly the DO provides that it will be
lifted once bilateral agreements (between the Phil.
and host countries) and other mechanisms for the
protection and welfare of Filipino workers are in
On 4
element: That it does not apply to all
Filipina workers is not a ground to impugn the
validity of the classification. Most of the victims of
abuses are DHs. It is therefore valid to limit the
DOs application to them. Had the ban been given
universal applicability, then it would have been
unreasonable and arbitrary. For obvious reasons, not
all of them are similarly circumstanced.
The petitioners reliance on the Constitutional
guaranty of worker participation "in policy and
decision-making processes affecting their rights and
benefits" is not well-taken. The right granted by
this provision, again, must submit to the
demands and necessities of the State's power of

Philippine Telegraph and Telephone Company
v. NLRC (1997)
J . Regalado


Grace de Guzman was hired as a reliever for the
employees of PTTC, when the latter go on leave
(maternity and other leaves). She spent more than 6
months with the company during the three times she
was hired as reliever. In September 1991, she was
asked to join the company on a probationary basis
(period of probation: 150 days). De Guzman did
not indicate in the forms she filed that she got
married in May, 1991. When PTTC supposedly
learned about the same later, its branch supervisor
in Baguio City, Delia M. Oficial, sent to private
respondent a memorandum dated January 15,
1992 requiring her to explain the discrepancy. In
that memorandum, she was reminded about the
company's policy of not accepting married
women for employment. Grace explained that she
did not know about the policy but the company
fired her anyway, effective January 29. Grace filed
a case for illegal dismissal. During the preliminary
conference, she volunteered information that she
was not able to remit about P2,380 to the company
and it was agreed that she sign a promissory note to
pay the same.

Labor Arbiter: She was already a regular worker

and entitled to security of tenure. [T]he ground
relied upon by petitioner in dismissing private
respondent was clearly insufficient, and that it was
apparent that she had been discriminated against on
account of her having contracted marriage in
violation of company rules

On appeal to the National Labor Relations
Commission (NLRC), said public respondent
upheld the labor arbiter and, in its decision dated
April 29, 1994, it ruled that private respondent had
indeed been the subject of an unjust and unlawful
discrimination by her employer, PT & T. However,
the decision of the labor arbiter was modified with
the qualification that Grace de Guzman deserved to
be suspended for three months in view of the
dishonest nature of her acts which should not be
condoned. A motion for reconsideration was denied.

On appeal to the SC, PTTC argues that it did not
discriminate on married women. PTTC said that
Grace was fired because she concealed information
regarding her status, not because of the status itself.
She also mishandled company funds, which she
herself admitted.

Decision: The Court upheld the NLRCs
reasoning, i.e,, Grace was a victim of
It is recognized that a company can set regulations
and rules for its employees in the exercise of its
management prerogatives; however, the same
should not result in discrimination and violation of
the law.

The Supreme Court noted that the Constitution,
international conventions, statutes, and the Labor
Code have provided for the protection of women in
the labor force. Nowhere has that prejudice against
womankind been so pervasive as in the field of

The Supreme Court agreed on this ruling because Grace has
been engaged in activities which are usually necessary or
desirable in the usual business or trade of the employer. (Art
280) Note also that she was fired just before the probationary
period of her employment ended. She was fired without basis.
In fact, the Court said that she was a victim of discrimination.
It follows that if she was not unfairly dismissed, she would
have finished the probationary period and she would become
regular. (My view.)
Management prerogative involves prescriptions encompass
the matter of hiring, supervision of workers, work
assignments, working methods and assignments, as well as
regulations on the transfer of employees, lay-off of workers,
and the discipline, dismissal, and recall of employees.
put in a case, an employer is free to regulate, according to his
discretion and best business judgment, all aspects of
employment, "from hiring to firing," except in cases of
unlawful discrimination or those which may be provided
by law.
labor, especially on the matter of equal employment
opportunities and standards. In the Philippine
setting, women have traditionally been
considered as falling within the vulnerable
groups or types of workers who must be
safeguarded with preventive and remedial social
legislation against discriminatory and
exploitative practices in hiring, training, benefits,
promotion and retention.

Sec. 14, Art. II

Sec. 3, Art. XIII - pointedly requires the State to
afford full protection to labor and to promote full
employment and equality of employment
opportunities for all, including an assurance of
entitlement to tenurial security of all workers
Sec. 14 Art. XIII - mandates that the State shall
protect working women through provisions for
opportunities that would enable them to reach their
full potential.

Corrective labor and social laws on gender
inequality have emerged with more frequency in the
years since the Labor Code was enacted on May 1,
1974 as Presidential Decree No. 442, largely due to
our country's commitment as a signatory to the
United Nations Convention on the Elimination of
All Forms of Discrimination Against Women

Labor Code
Article 130 - involves the right against particular
kinds of night work while
Article 132 - ensures the right of women to be
provided with facilities and standards which the
Secretary of Labor may establish to ensure their
health and safety.
Art. 138 - For purposes of labor and social
legislation, a woman working in a nightclub,

The State recognizes the role of women in nation-
building, and shall ensure the fundamental equality
before the law of women and men (Sec.14, Art. II).
The Court cited several examples: RA 6727 (1989)-
explicitly prohibits discrimination against women with respect
to terms and conditions of employment, promotion, and
training opportunities. RA 6955 (1990) - which bans the
"mail-order-bride" practice for a fee and the export of female
labor to countries that cannot guarantee protection to the rights
of women workers. RA 7192, The Women in Nation-
Building Act (1992) - affords women equal opportunities
with men to act and to enter into contracts, and for
appointment, admission, training, graduation, and
commissioning in all military or similar schools of the Armed
Forces of the Philippines and the Philippine National Police;
Republic Act No. 7322
increasing the maternity benefits
granted to women in the private sector. RA 7322 (1995) -
increasing the maternity benefits granted to women in the
private sector. RA 7877 (1995) which outlaws and punishes
sexual harassment in the workplace and in the education and
training environment. RA 8042, The Migrant Workers and
Overseas Filipino Act of 1995.
cocktail lounge, massage clinic, bar or other similar
establishments shall be considered as an employee
Article 135 - recognizes a woman's right against
discrimination with respect to terms and conditions
of employment on account simply of sex.
Article 136 explicitly prohibits discrimination
merely by reason of the marriage of a female

The company policy against married women
cannot stand amidst all these laws and
regulations. The Court refused to believe the
argument that Grace was not fired for being
married and that discrimination was not behind
her dismissal:
It is illogical to say that she was fired for concealing
the fact the she was married and not because of that
fact. Besides, the memorandum signed by Ms.
Oficial contradicts this argument.
Neither was Graces failure to remit certain funds
the real basis for firing her. As observed by the
labor arbiter, the allegation was a mere afterthought.
The act was also not deliberate; it was caused by
negligence. Moreover, the parties already agreed to
allow Grace to pay for the unremitted funds.

The Court ended with a discussion of Art. 136 of
the Labor Code, above. Its a substantial discussion
and has a relation to the next case (Duncan v.

In Zialcita v. PAL, the court declared the PAL
policy of firing flight attendants after they get
married saying it is incompatible to Art. 136 of the
Labor Code. Article 136 is not intended to apply
only to women employed in ordinary occupations,
or it should have categorically expressed so. The
sweeping intendment of the law, be it on special or
ordinary occupations, is reflected in the whole text
and supported by Article 135 that speaks of non-
discrimination on the employment of women.
The judgment of the Court of Appeals in Gualberto,
et al. vs. Marinduque Mining & Industrial
considered as void a policy of the
same nature. In said case, respondent, in dismissing
from the service the complainant, invoked a policy
of the firm to consider female employees in the
project it was undertaking as separated the moment
they get married due to lack of facilities for married
women. Branding the policy of the employer as an
example of "discriminatory chauvinism" tantamount
to denying equal employment opportunities to
women simply on account of their sex, the appellate
court struck down said employer policy as unlawful
in view of its repugnance to the Civil Code,
Presidential Decree No. 148 and the Constitution.
This is called sex-plus discrimination under US
However, the ruling in Gualberto cited instances
when such discrimination of marriage may be
considered valid: Upon the other hand, a
requirement that a woman employee must remain
unmarried could be justified as a "bona fide
occupational qualification," or BFOQ, where the
particular requirements of the job would justify the
same, but not on the ground of a general principle,
such as the desirability of spreading work in the
workplace. A requirement of that nature would be
valid provided it reflects an inherent quality
reasonably necessary for satisfactory job
performance. Thus, in one case, a no-marriage rule
applicable to both male and female flight attendants,
was regarded as unlawful since the restriction was
not related to the job performance of the flight
attendants.(45A Am Jur. 2d Job Discrimination
Sec. 506 p486.)

Duncan Association of Detailman PGTWO v.
Glaxo Welcome Philippines (2004)
J . Regalado

Pedro Tecson ("Tecson") was employed in 1995 by
respondent Glaxo Wellcome Philippines, Inc.
("Glaxo") as a medical representative. He was
assigned to market Glaxo's products in the
Camarines Sur-Camarines Norte sales area.
Upon his employment, Tecson signed an
employment contract, wherein he agreed, among
others, to study and abide by existing company
rules; to disclose to management any existing or
future relationship by consanguinity or affinity
with co-employees or employees of competing
drug companies; and if management found that
such relationship posed a possible conflict of
interest, to resign from the company.
Nonetheless, Tecson became romantically involved
with Bettsy, an employee of a rival pharmaceutical
firm Astra Pharmaceuticals ("Astra"). The two
eventually married in September of 1998. The
relationship, including the subsequent marriage,
was cause for consternation to Glaxo. On January
1999, Tecson's superiors informed him that his
marriage to Bettsy had given rise to a conflict of
interest. Negotiations ensued, with Tecson
adverting to his wife's possible resignation from
Astra, and Glaxo making it known that they
preferred to retain his services owing to his good
performance. Yet no resolution came to pass. In
September 1999, Tecson applied for a transfer to
Glaxo's milk division, but his application was
denied in view of Glaxo's "least-movement-
possible" policy. Then in November 1999, Glaxo
transferred Tecson to the Butuan City-Surigao City-
Agusan del Sur sales area. Tecson asked Glaxo to
reconsider its decision, but his request was denied.
The matter was then brought to the Glaxo
Grievance Committee, and subsequently to a
voluntary arbitrator. The National Conciliation and
Mediation Board (NCMB) rendered its decision,
declaring as valid Glaxo's policy on relationships
between its employees and persons employed with
competitor companies, and affirming Glaxo's right
to transfer Tecson to another sales territory.
Petitioners claim that the company rule applied to
him was invalid. It violates the equal protection
clause of the Constitution because it creates invalid
distinctions among employees on account only of
marriage. They claim that the policy restricts the
employees right to marry.
It was also alleged that Tecson s transfer to
Agusan, diminution in pay he suffered, his
exclusion from seminars and training sessions for
medical representatives, and the prohibition in
promoting respondents products which were
competing with Astras products all amounted to a
constructive dismissal.

Decision: CA upheld.


The company policy on marriage was valid. It
does not prohibit marriage per se. employees are
free to marry who they want. What it seeks to
prevent is conflict of interest, which may be too
detrimental in a very competitive business like
the pharma industry. (Court cited a similar case in
the US state of Georgia, Emory v. Georgia

Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies
and other confidential programs and
information from competitors, especially so that
it and Astra are rival companies in the highly
competitive pharmaceutical industry.
The prohibition against personal or marital
relationships with employees of competitor
companies upon Glaxos employees is reasonable
under the circumstances because relationships of
that nature might compromise the interests of the
company. In laying down the assailed company
policy, Glaxo only aims to protect its interests
against the possibility that a competitor company
will gain access to its secrets and procedures.
(This is especially true in this case since Bettsy was
Astras Branch coordinator in Albay and was
therefore played an active role in the market war
between pharmaceuticals.)
That Glaxo possesses the right to protect its
economic interests cannot be denied. No less than
the Constitution recognizes the right of
enterprises to adopt and enforce such a policy to
protect its right to reasonable returns on
investments and to expansion and growth.

Indeed, while our laws endeavor to give life to the
constitutional policy on social justice and the
protection of labor, it does not mean that every
labor dispute will be decided in favor of the

There was no constructive dismissal. Constructive
dismissal is defined as a quitting, an involuntary
resignation resorted to when continued
employment becomes impossible, unreasonable,
or unlikely; when there is a demotion in rank or
diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes
unbearable to the employee. None of these
conditions are present in the instant case.
The transfer was in fact made in order to avoid
conflict of interest. (The couple would be involved
in different sales area and will not be in a position
to share marketing information that may be
detrimental to Glaxo).Moreover, in Abbott
Laboratories (Phils.), Inc. v. National Labor
Relations Commission
the Court upheld the right of
the drug company to transfer or reassign its
employee in accordance with its operational
demands and requirements. By the very nature of
his employment, a drug salesman or medical
representative is expected to travel. He should
anticipate reassignment according to the
demands of their business. ..

Makati Haberdashery vs NLRC, 179 SCRA 449

Penned by Justice Fernan
Petition for certiorari to review the decision of the
NLRC which affirmed the decision of the Labor
Arbiter who jointly heard and decided two cases
filed by the Union in behalf of the private

Private complainants are working for Makati
Haberdashery Inc as tailors, seamstress, sewers,
basters, and plantsadoras and are paid on a piece-
rate basis (except two petitioners who are paid on a
monthly basis) and in addition, they are given a
daily allowance of P 3.00 provided they report
before 9:30 a.m.
Work sked: 9:30-6 or 7 p.m., Mondays to Saturdays
and even on Sundays and holidays during peak
Unions first case was on:
underpayment of
basic wage
living allowance
non-payment of
holiday pay
service incentive pay
month pay
benefits provided for under Wage Orders 1-5
While the first case was pending decision, Pelobello
left an open package containing a jusi barong
tagalong with salesman Rivera. He was caught and
confronted about this and he explained that this was
ordered by Zapata, also a worker, for his (personal)

It involved a complaint filed by a medical
representative against his employer drug company for
illegal dismissal for allegedly terminating his employment
when he refused to accept his reassignment to a new

customer. Zapata allegedly admitted that he copied
the design of the company but later denied
ownership of the same.
They were made to explain why no action should be
taken against them for accepting a job order which
is prejudicial and in direct competition with the
business. However they did not submit and went on
AWOL until the period given for them to explain
expired hence the dismissal.
Illegal dismissal complaint on the second case filed
before the LA Diosana.
LA declared petitioners guilty of illegal dismissal
and ordered to reinstate Pelobello and Zapata and
found petitioners violating decrees of COLA,
service incentive and 13
month pay. Commission
analyst was directed to compute the monetary
awards which retroacts to three years prior to filing
of case.
NLRC affirmed but limited backwages to one year.

Issue: WON employees paid on piece-rate basis are
entitled to service incentive pay (relevant to title)

Held: NO, fall under exceptions set forth in the
implementing rules

As to the service incentive leave pay: as piece-rate
workers being paid at a fixed amount for
performing work irrespective of time consumed in
the performance thereof, they fall under the
exceptions stated in Sec 1(d), Rule V, IRR, Book
III, Labor Code.

Service Incentive Leave
SECTION 1. Coverage. This rule shall apply to
all employees except:
(d) Field personnel and other employees whose
performance is unsupervised by the employer
including those who are engaged on task or contract
basis, purely commission basis, or those who are
paid a fixed amount for performing work
irrespective of the time consumed in the
performance thereof;

Other issues discussed:

ER-EE relationship
Held: There is such relationship because in the
application of the four-fold test, it was found that
petitioners had control over the respondents not
only as to the result but also as to the means and
method by which the same is to be accomplished.
Such control is proven by a memorandum which
enumerates procedures and instructions regarding
job orders, alterations, and their behavior inside the

Minimum Wage
Held: No dispute that entitled to minimum wage but
court dismissed case for lack of sufficient evidence
to support claim that there was in fact
underpayment which was ruled by the LA and
which the private resp did not appeal to in the
NLRC nor in the SC. Well-settled is the rule that
an appellee who has not himself appealed cannot
obtain from the appellate court any affirmative
relief other than the ones granted in the decision of
the court below.

Held: Entitled. They are regular employees. IRR of
Wage No. 1, 2, and 5 provide that all workers in
the private sector, regardless of their position,
designation of status, and irrespective of the
method by which their wages are paid are
entitled to such allowance.

Month pay
Held: Entitled under Sec. 3(e) of the IRR of PD 851
which is an exception to the exception of such
provision which states that employers whose
workers are paid on piece-rate basis in which are
covered by such issuance in so far as such workers
are concerned.

Illegal dismissal
Held: Dismissed for justifiable ground based on
Article 283 (a) and (c). Inimical to the interest of
the employer. Not dismissed just because of union
Sentinel Security Agency, Inc. v. NLRC, 295
SCRA 123 1998)

Penned by Justice Panganiban

Certiorari seeking the reversal of the two petitions
to the NLRC


Five employees of Sentinel Security Agency filed
for illegal dismissal against the Agency and its
Client Philamlife Cebu and prayed for payment of
salary differential, service incentive pay, and
separation pay.
The complainants were assigned to Philamlife Cebu
but after nearly 20 years for some employees and
more than 20 years for some, Philam requested on
Dec 16, 1993 that security guards be replaced in the
Clients offices in Cebu, Bacolod, CDO, Dipolog
and Iligan.
Agency issued a Relief and Transfer Order
replacing the guards and for them to be reassigned
to other clients effective on Jan 16 1994. On Jan 18
and Feb 4 1994, the employees filed an illegal
dismissal complaint because of a threat from the
personnel manager who told them that they were
replaced because they were old.
Hence the complaint against the Agency and the
Client and Agencys defense: No dismissal because
the contract allows them to recall security guards
from assigned posts at the will of either party and
that the Agency is allowed for a period of not more
than six months, to retain the complainants on
floating status. Agency should have been given a
chance to give new assignments to complainants.
Clients defense: No ER-EE relationship. Job
contract, separate corporate personalities and not
necessary and desirable to the business or trade.

LA: Agency and Client ordered to pay solidarily
complainants 13
month pay and service incentive
leave benefits amounting to a little more than P60K.

NLRC: There was constructive dismissal. Modified
awards. Deleted 13
month pay for previous years.
Twin remedies. Ordered:
Agency to give separation pay at the rate of
month pay for every year of service and
Agency and Client to solidarily pay backwages and
month pay for one year (Jan 1994-1995).

Issue: 1) WON there was illegal dismissal
2) And if so, WON Philam may be held


Yes there was illegal dismissal but SC does not
agree with NLRC for its reasons for ruling that
there was ID. NLRCs reason: Client and Agency
wanted to circumvent the Retirement Law. SC: You
NLRC are speculating and your contention is
SOLGEN: Complainants were placed on temporary
off-detail which is a standard stipulation in
employment contracts since the availability of
assignment for security guards is dependent on
contracts entered into by the agency. Off-detail or
Floating status means waiting to be posted and
this is not dismissal so long as such status does not
continue beyond a reasonable time.
However SOLGEN made a pronouncement that
although abandonment is inconsistent with illegal
dismissal, such rule is not applicable when the
complainants expressly reject this relief and ask for
separation pay instead.
SC (with conviction): You are wrong SolGen!
How dare you be wrong? You know that
abandonment requires a deliberate and unjustified
refusal of an employee to resume to his work
coupled with a clear absence of any intention to
return to his/her work and the fact that complainants
did not pray for reinstatement is not a sufficient
proof of abandonment, you moron. They reported to
the Agency on several dates but it did not give any
reassignment. Abandonment has been ruled to be
incompatible with constructive dismissal as stated
in Escobin vs NLRC. Because I am infallible and
you are in dire need of enlightenment, let me
demonstrate the correct reasoning why they are
illegally dismissed.
It has been recognized that the management has a
prerogative to transfer an employee from one office
to another within the same business establishment
as the exigency of the business may require
provided that transfer:
does not result in a demotion in rank
diminution in salary, benefits, and other privileges
not unreasonable, inconvenient or prejudicial to the
not used as a subterfuge by the employer to rid
himself of an undesirable worker
SC: Solgen, in case you dont know what a transfer
means, let me extend my unparalleled mastery of
this craft which,unfortunately, you dont have:
- Transfer may mean two things: a) from one
position to another of equivalent rank, level or
salary b) from one office to another within the same
business establishment. Oh please, do not even
think this is equivalent to promotion because the
latter involves a scalar ascent.
It should have been a mere changing of the guards,
a reshuffling or exchange of their posts or
assignments to their posts and such that no security
guard would be without assignment. But did the
Agency implement such recognized concept? NO!!!
It hired new security guards, younger, braver, full of
life men whose age are in their prime! This resulted
in a lack of posts to which the senile, used and
wrinkled men could have been reassigned.
Floating status requires the dire exigency of the
employers bona fide suspension of operation,
business or undertaking. In security services, this
happens when the clients do not renew their
contracts with a security agency but in the case at
bar, the Client awarded a new contract to the
Agency. No surplus of security guards over
available assignments. No suspension of operation
that would have justified placing the complainants
off-detail and making them wait for 6 months.
SC: The logical conclusion here Solgen, in case
you dont know whats logical, is that the Agency
illegally dismissed the complainants.

Only solidarily to the service incentive leave pay.
Since no ER-EE relationship between Client and
complainants, cannot be held liable for separation
pay and backwages.
Art 106, 107 and 109 provide when the principal
who contracted the contractor/subcontractor may be
held solidarily liable. Art 109 states that every
employer or indirect employer shall be held
responsible with his contractor or subcontractor for
any violation of any provision of this Code. In
determining the extent of their civil liability under
this Chapter, they shall be considered direct
Such liability covers service incentive leave pay of
the complainant during the time they were posted at
the Cebu Branch. Service had been rendered,
liability accrued even when they were eventually
transferred or reassigned.
Art. 95 of the LC expressly provides that service
incentive leave is expressly granted to every
employee who has rendered at least one year or
service shall be entitled to a yearly service incentive
leave of five days with pay.
IRR of the LC: Unused service incentive leave is
commutable to its money equivalent as provided by
Sec. 5: The service incentive leave shall be
commutable to its money equivalent if not used or
exhausted at the end of the year

Pau: May the contrary be stipulated? If yes, when?
Supposing the employer gives more than 5 days of
service incentive leave, can they now stipulate that
such leaves may not be converted to its money
equivalent? When can such leaves be not converted
into cash?

Philippine Federation of Credit Cooperatives,
Inc. v. NLRC, 300 SCRA 72 (1998)


Victora Abril was employed by PFCCI which was
engaged in organizing services to credit and
cooperative entities as Auditor/Field Examiner and
thereafter held position in different capacities as
office secretary and cashier-designate from 1982 to

She gave birth and upon her return in November
1989, a certain Vangie Santos had been
permanently appointed to her former position. She
accepted then a position as Regional Field Officer
on a probationary basis for 6 months. Period
elapsed but respondent was given another
employment contract for one year until 1991 after
which period, her employment was terminated.

Illegal dismissal was filed. LA dismissed her file
but NLRC reversed and ordered reinstatement.

Issue: WON she was illegally dismissed and WON
she was a regular employee.

Held: Yes. She was illegally dismissed and YES she
was a regular employee.

Art. 281 of the LC allows the employer to secure
services of an employee on a probi basis which
allows him to terminate the latter for just cause or
upon failure to qualify in accordance with
reasonable standards.

Probationary Employee: one who is on trial by an
employer during which the employer determines
whether or nor he is qualified for permanent
employment. A probationary employment is made
to afford the employer an opportunity to observe the
fitness of a probationer while at work, and to
ascertain whether he will become a proper and
efficient employee. Probationary employees,
notwithstanding their limited tenure, are also
entitled to security of tenure. Except for just cause
or under employment contract, a probi employee
cannot be terminated.

Petitioner alleged that she has abandoned her work
for 8 months (due to childbirth) and the position she
applied for as RFO was fixed for a specific period
thus she is considered as a casual or contractual
employee under Art. 280.

Three kinds of employees:

Regular employees: whose work is necessary or
desirable to the usual business of the employer

Project employees: whose employment has been
fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee or where the work or services to be
performed is seasonal in nature and the employment
is for the duration of the season.

Casual employees: those who are neither regular not

The contract between the petitioner and the
respondent was scrutinized and the Court arrived at
a conclusion that the contract was ambiguous, and
in a contract of adhesion, if it is ambiguous, any
ambiguity therein should be construed strictly
against the part who prepared it. (Contract: xxx
probationary status for a period not to exceed six (6)
months from said effectivity subject to renewal of
this contract should the employees performance be

Regardless of the designation the petitioner
company may have conferred upon resp
employment status, it is uncontroverted that the
latter, having completed the probationary period
and allowed to work thereafter, became a regular
employee who may be dismissed only for just or
authorized causes.

Pangilinan v. General Milling corp., 434 SCRA
159 (2004)


General Milling Corporation (GMC) is in
production and sale of livestock and poultry. It is
also a distributor of dressed chicken. It employs
hundreds of employees on regular or casual basis
(emergency workers).

The petitioners were emergency workers under
temporary/casual employment contracts for a
period of five months. They were chicken dressers,
packers and helpers. Upon expiration of contracts,
their services were terminated.

Filed for illegal dismissal on the basis that based on
the nature of their work, they were regular

LA: They are regular employees.
NLRC: They are regular employees.
Issue: WON they are regular employees.

Held: No. Art. 280 comprehends 3 kinds of
employees (see above).

On regular employee:

A regular employee is one who is engaged to
perform activities which are necessary and desirable
in the usual business or trade of the employer as
against those which are undertaken for a specific
project or are seasonal.

There two separate instances whereby it can be
determined that an employment is regular:

if the particular activity performed b the employee
is necessary or desirable in the usual business or
trade of the employer
if the employee has been performing the job for at
least a year

In St. Theresas School of Novaliches vs NLRC, it
was held that Art. 280 does not prohibit an
employment contract with a fixed period. It does
not necessarily follow that where the duties of the
employee consist of activities usually necessary or
desirable in the usual bisness of the employer, the
parties are forbidden from agreeing on a period of
time for the performance of such activities. There is
thus nothing essentially contradictory between a
definite period of employment and the nature of the
employees duties.

The records reveal that the stipulations in the
employment contracts were knowingly and
voluntarily agreed to by the petitioners without
force, duress or improper pressure or any
circumstances that vitiated their consent.

They were hired as emergency workers and while
their employment was necessary and desirable in
the usual business of the resp, they were employed
on a mere temporary basis since their employment
was limited to a fixed period.

There was no illegal dismissal when the petitioners
services were terminated by reason of the expiration
of their contracts. Lack of notice of termination is of
no consequence, because when the contract
specifies the period of its duration, it terminates on
the expiration of such period. A contract for
employment for a definite period terminates by its
own term at the end of such period.
De Leon v. NLRC, 176 SCRA 615 (1989)


De Leon was an employee of La Tondena Inc in
1981 in the Maintenance Section of the Engineering
Department. His work consisted mainly of painting
company building and equipment and other odd
jobs relating to maintenance. He was paid on a daily
basis thru petty cash vouchers.

After 1 year, he requested that he be included in the
payroll of regular workers and upon this request he
was dismissed.

LA: He was a regular employee. Emiliano Tanque
Jr who was regularly employed by the company as a
maintenance job doing same jobs that of De Leon
who was also working with the former. He rendered
service for more than one year continuously.

NLRC: Reversed. Reasoned that he was hired only
as a painter and to repaint specifically the Mama
Rosa building at the comps Tondo compound. It
was made clear to him that he would be so engaged
on a casual basis so much so that he was not
required to accomplish an application form or to
comply with the usual requirements for employment
and that he was never paid his salary through the
regular payroll and always in petty cash vouchers.

SOLGEN: The dismissal of the petitioner after he
demanded to be regularized was a subterfuge to
circumvent the law on regular employment. He
further recommends that the questioned decision
and resolution of the NLRC be annulled and that the
order of the LA directeing the reinstatement and
payment of backwages and other benefits be upheld.

SC: NLRC decision should be reversed.

An employment is deemed regular when the
activities performed by the employee are usually
necessary or desirable in the usual business or trade
of the employer.

Not considered regular are the so-called project
employment the completion of termination of
which is more or less determinable at the time of
employment, such as those employed in connection
with a particular construction project and seasonal
employment which by its nature is only desirable
for a limited period of time.

However, an employee who has rendered at least
one year of service, whether continuous or
intermittent, is deemed regular with respect to the
activity he performed and while such activity
actually exists.

The primary standard in determining a regular

Reasonable connection between the particular
activity performed by the employee in relation to
the usual business or trade of the employer. The test
is whether the former is usually necessary or
desirable in the usual business or trade of the
employer. The connection can be determined by
considering the nature of the work performed and
its relation to the scheme of the particular business
or trade in its entirety.

Also, if the employee has been performing the job
for at least a year, even if the performance is not
continuous or merely intermittent, the law deems
the repeated and continuing need for its
performance as sufficient evidence of the necessity
if not indispensability of that activity to the
business. Hence, the employment is also considered
regular, but only with respect to such activity and
while such activity exists.

The law demands that the nature and entirety of the
activities performed by the employee be considered.
If his job was truly only to paint a building, there
would have been no basis for giving him other work
assignments in between painting activities.

It is not tenable to argue that the painting and
maintenance work of petitioner are not necessary in
resps business of manufacturing liquors and wines
just as it cannot be said that only those who are
directly involved in the process of producing wines
and liquors may be considered as necessary
employees. Otherwise, there would have been no
need for regular Maintenance Section of resp
companys Engg Department, manned by Tanque
whom petitioner worked with.

He was even rehired by the company through a
labor agency was returned to his post with the same

It is not the will and word of the employer, or the
procedure of hiring, or the manning of paying his
salary. It is the nature of the activities performed in
relation to the particular business or trade
considering all circumstances and in some cases, the
length of time of its performance and its continued

Violeta v. NLRC, 280 SCRA 520 (1997)

Violeta and Baltazar were employees of DISC.

Violeta worked in CDCP, a sister corporation of
DISC from Dec 1980 to Feb 1981. Then hired him
as Erector II at a project for Philphos in Nov 1982
to Dec 1984. Then in Jan 1985 he was reassigned as
Erector for Five Stand TCM Project with vacation
and sick leaves and was designated as regular
project employee at one project with NSC. Again
rehired in June 1989 and another in Feb 1992.
Because of the completion of the particular item of
work, termination of services.

Baltazar worked in CDCP in June 1980 as lead
carpenter and just like Violeta, he was transferred
from one project to another as a regular project
employee. He was separated in 1991 as a result of
the completion of the said item of work.

Quitclaims were executed.

Filed for illegal dismissal contending that they are
already regular employees who cannot be dismissed
on the ground of completion of the particular
project where they are engaged.

LA: dismissed for lack of merit but ordered for
separation pay because it was the policy of DISC to
give separation pay to employees who have
rendered one year of service. The conclusion was
based on the pet admission that they are regular
project employees thus, their employment was
deemed coterminous with the project for which
their employer engaged them.

NLRC: Reversed. Although the appointment
specified fixed terms or periods of employment, the
fact that hey were hired and transferred from one
project to another made both petitioners non-project
employees who cannot be terminated by reason
alone of the completion of the project. They were
hired no only for one particular project but different
projects one after the other.

BUT! Same division of NLRC reversed itself upon
motion of the private resp. Their basis was the
employment of petitioners in one of the last projects
(ETL #3 Civil Works), it was for a specific or fixed
period thus making them project employees.

ISSUE: WON they are regular employees.

HELD: Yes. They are regular (non-project) and not
project employees.

In order to properly characterize petitioners
employment, it is important to ascertain whether or
not their employment falls under the exceptions
provided in Article 280 of the Code.

The principal test for determining whether
particular employees are properly characterized as
project employees, as distinguished from regular
employees is whether or not the project
employees were assigned to carry out a specific
project or undertaking, the duration (and scope) of
which were specified at the time the employees
were engaged for that project.

Project employees: those workers hired

for a specific project of undertaking (which should
be reasonable determinable)
the completion or termination of such project or
undertaking has been determined at the time of
engagement of the employee (which should be
defined in an employment agreement and made
clear to the employee at the time of hiring).

Based on the above criteria, the petitioners are
regular employees of private respondents, and not
project employees as postulated by resp NLRC.

An examination of said appointments reveals that
the completion or termination of the project for
which petitioners were hired was not determined at
the start of their employment. There is no specific
mention of the period or duration when the project
will be completed or terminated.

It is not enough that an employee is hired for a
specific project or phase of work. There must be a
determination of or a clear agreement on the
completion or termination of the project at the time
the employee is engaged if the objective of Article
280 is to be achieved. Since this requirement was
not met, they should be considered as regular

Jurisprudence abounds with consistent rule that the
failure of an employer to report to the nearest Public
Employment Office the termination of its workers
services every time a project or a phase thereof is
completed indicates that the said workers are not
project employees. In the case, only the last and
final termination was reported to the labor office.
Private resp should have filed as many reports of
termination as there were construction projects
actually finished if pet were indeed proj employees
considering that they were hired and rehired for
various projects.

On the gaps of employment: Art. 280 contemplates
both continuous and broken services.

San Miguel Corporation v. NLRC, 297 SCRA
277 (1998)


De Guzman was hired by SMC as helper/bricklayer
for a specific project, the repair and upgrading of
furnace C and his contract was for a specific period
(4 months). He was again hired but this time for the
draining/cooling down of furnace F and the
emergency repair of furnace E. Upon the
completion of the last task, termination of services.
Illegal dismissal was filed.

Issue: Regular employee or Project employee?

Held: Project employee.

He was hired for a specific project that was not
within the regular business of the corporation.
Petitioner is not engaged in the business of repairing
furnaces. Although the activity was necessary to
enable petitioner to continue manufacturing glass,
the necessity therefore arose only when a particular
furnace reached the end of its life or operating
cycle. Or, as in the second undertaking, when a
particular furnace required an emergency repair.

The undertakings have specified goals and purposes
which are fulfilled once the designated work was
completed. Moreover, undertaking were also
indentifiably separate and distinct from the usual,
ordinary or regular business operations of
petitioner, which is glass manufacturing.

These undertakings, the duration and scope of
which had been determined and made known to
private resp at the time of his employment, clearly
indicated the nature of his employment as a project
employee. Thus, his services were terminated
legally after the completion of the project.
General Milling Corp. (GMC) is a domestic
corporation engaged in the production and sale of
livestock and poultry. It is also a distributor of
dressed chicken to various restaurants and
establishments nationwide.
Petitioners were employed by GMC as emergency
workers at its Cainta poultry plant under separate
temporary/casual contracts of employment for a
period of five months. They worked as chicken
dressers, packers or helpers.
Upon expiration of the employment contracts,
petitioners services were terminated. They filed
separate complaints for illegal dismissal and non-
payment of holiday pay, 13
month pay, night shift
differential and service incentive leave pay before
the NLRC.
Petitioners allege that they were regular employees
of GMC since their work as chicken dressers was
necessary and desirable in the usual business of
GMC, and that GMC terminated their services
without just cause and due notice. They further
argued that GMC could not rely on the
nomenclature of their employment as temporary or
The Labor Arbiter ruled in favour of petitioners
declaring that they were regular employees and that
they were illegally dismissed.
The NLRC rendered a decision reversing that of the
Labor Arbiter. It held that petitioners were
temporary or contractual employees of GMC and
that they were legally terminated upon the
expiration of their respective contracts. Citing the
case of Brent School Inc. V. Zamora, the NLRC
explained that while petitioners work was
necessary and desirable in the usual business of
GMC, they cannot be considered regular employees
since they agreed to a fixed term.
The Court of Appeals affirmed the NLRC. The CA
ruled that where the duties of the employee consist
of activities usually necessary or desirable in the
usual business of the employer, it does not
necessarily follow that the parties are forbidden
from agreeing on a period of time for the
performance of such activities (St. Theresas School
of Novaliches v. NLRC).

ISSUE: WON petitioners were regular employees
of GMC


Art. 280, Labor Code comprehends 3 kinds of
REGULAR EMPLOYEES or those whose work is
necessary or desirable to the usual business of the
PROJECT EMPLOYEES or those whose
employment has been fixed for a specific project or
undertaking the completion or termination of which
has been determined at the time of the engagement
of the employee or where the work or services to be
performed is seasonal in nature and the employment
is for the duration of the season
CASUAL EMPLOYEES or those who are neither
regular nor project employees
There are 2 separate instances whereby it can be
determined that an employment is regular:
If the particular activity performed by the employee
is necessary or desirable in the usual business or
trade of the employer
If the employee has been performing the job for at
least a year
The employment contracts entered into by the
petitioners showed that their employment was
limited to a fixed period, usually five or six months,
and did not go beyond such period. The records
reveal that the stipulations in the contracts were
knowingly and voluntarily agreed to by petitioners
without force, duress or improper pressure, or any
circumstances that vitiated their consent. Also,
nothing therein shows that these contracts were
used as a subterfuge by the respondent GMC to
evade the provisions of Arts. 279-280 of the Labor
While petitioners employment as chicken dressers
is necessary and desirable in the usual business of
GMC, they were employed on a mere temporary
basis, since their employment was limited to a fixed
period. As such, they are merely contractual
employees and thus, there was no illegal dismissal
Lack of notice of termination is of no consequence
because when the contract specifies the period of its
duration, it terminates on the expiration of such
period. A contract for employment for a definite
period terminates by its own term at the end of such


A copy of the Labor Arbiters decision was sent by
registered mail addressed to Atty. Emmanuel Pacsi,
GMCs counsel, but it was Beth Cacal, a clerk of
GMC, who received the copy of the decision on
October 28, 1997. Contending that the copy was
received only on November 3,1997, GMC filed an
appeal on November 12,1997 before the NLRC.
Petitioners filed a Motion to Dismiss GMCs appeal
on the ground that the latter was filed five days late.
GMC opposed the motion, contending that Cacal
was a mere clerk and not a member of the staff of
the Legal Department, and thus Cacals receipt of
the decision was not equivalent to receipt by
GMCs counsel.

The NLRC ruled that GMC filed its appeal within
the reglementary period. Service by registered mail
is completed on upon actual receipt thereof by the
addressee. The CA and SC affirmed, ruling that a
service of a copy of a decision on a person who is
neither a clerk nor one in charge of the attorneys
office is invalid.



Private respondents Faburada et. al. filed a
complaint against PHCCI for illegal dismissal,
premium pay, separation pay, wage differential,
moral damages and attys fees.
PHCCI filed a motion to dismiss on the ground that
no employer-employee relationship exists since
private respondents are all members and co-owners
of the cooperative. Also, private respondents have
not exhausted the remedies provided in the coop by-
laws. PHCCI also filed a supplemental motion to
dismiss alleging that RA 6939, the Cooperative
Development Authority Law, requires conciliation
or mediation within the cooperative before a resort
to judicial proceeding.
The Labor Arbiter ruled in favor of the private
respondents, holding that the case is impressed with
employer-employee relationship and that the laws
on cooperatives is subservient to the Labor Code.
The NLRC affirmed.

ISSUE: WON there is an employer-employee
relationship between the parties and WON private
respondents were regular employees


Elements in determining existence of employer-
employee relationship:
Selection and engagement of the worker or the
power to hire
The power to dismiss
Payment of wages by whatever means
Power to control the workers conduct

The above elements are present here. PHCCI
through its Manager Mr. Edilberto Lantaca, Jr. hired
respondents as computer programmer and clerks.
They worked regular working hours, were assigned
specific duties, were paid regular wages, and made
to accomplish regular time records, and worked
under the supervision of the manager.

Art. 280, Labor Code comprehends 3 kinds of
REGULAR EMPLOYEES or those whose work is
necessary or desirable to the usual business of the
PROJECT EMPLOYEES or those whose
employment has been fixed for a specific project or
undertaking the completion or termination of which
has been determined at the time of the engagement
of the employee or where the work or services to be
performed is seasonal in nature and the employment
is for the duration of the season
CASUAL EMPLOYEES or those who are neither
regular nor project employees

There are 2 separate instances whereby it can be
determined that an employment is regular:
If the particular activity performed by the employee
is necessary or desirable in the usual business or
trade of the employer
If the employee has been performing the job for at
least a year

Private respondents were rendering services
necessary to the day-to-day operations of PHCCI.
This alone qualified them as regular employees.
Moreover, all of them except one worked with
PHCCI for more than 1 year.

That Faburada worked only on a part-time basis
does not mean that he is not a regular employee.
Regularity of employment is not determined by the
number of hours one works but by the nature and
length of time one has been in that particular job.



Sandoval Shipyards is engaged in the building and
repair of vessels. It contends that each vessel is a
separate project and that the employment of
workers is terminated with the completion of each
In GR No. 65689, private respondents Diamante et.
al. were assigned to the construction of LCT
Catarman. After 3 months, the project was
completed, and Diamante et. al. were served a
termination notice. The termination was reported to
the Ministry of Labor. The workers filed a
complaint for illegal dismissal with the NLRC
The LA and NLRC ordered the reinstatement of
In GR No. 66119, private respondents Dela Cruz et.
al. were assigned to the construction a tanker M/T
Oil Queen VII, ordered by Mobile Oil Philippines.
Upon completion of the project, Dela Cruz et. al.
who worked aswelders, helpers and construction
workers were terminated. The termination was duly
reported to the Ministry of Labor. The workers also
filed for illegal dismissal.
The NCR Director and the Deputy Minister of
Labor ordered the reinstatement of Dela Cruz et. al.

ISSUE: WON the workers were project employees




The private respondents were project employees
whose work was coterminous with the project for
which they were hired

Project employees are those where the
employment has been fixed for a specific project or
undertaking the completion or termination of which
has been determined at the time of the engagement
of the employee (Art. 281, LC)
Project employees are those employed in
connection with a particular construction project.
Regular employees are those employed by a
construction company without reference to any
particular project (Policy Instruction No. 20)

Workers who are hired by a firm whose work is
solely contracting for the repair of vessels are
project employees who may be automatically laid
off after the project is completed. Here, it is
significant to note that Sandoval Shipyards does not
construct vessels for sale or otherwise which will
demand continuous productions of ships and will
need permanent or regular workers. It merely
accepts contracts for shipbuilding or repair of
vessels from third parties and only on those
occasions that it hires workers to do the job which
lasts only for less than ayear or longer
The completion of the project automatically
terminates the employment, and the employer is
only obliged to report the termination of the
employment with the Ministry of Labor.



Private respondents filed a petition with the Social
Security Commission for SSS coverage and
constributions against petitioner Chua, claiming that
they were all regular employees in the latters
construction business.
Private respondents claimed they were assigned by
petitioner Chua, owner of Prime Mover
Construction Development, as carpenters, masons
and fine graders in the latters various construction
projects. They allege that Chua dismissed them
without justifiable grounds and without notice to
them and the Ministry of Labor.
Petitioner Chua claimed that private respondents
had no cause of action against him, and assuming
there was any, the same was barred by prescription
and laches. He also claimed that the workers were
not regular but project employees, and thus not
covered by SSS. Granting that private respondents
were entitled to SSS coverage, his failure to remit
contributions was due to an honest belief that
respondents are project employees.
SSC ruled in favour of private respondents. The
CA affirmed.

ISSUE: WON private respondents are entitled to
compulsory SSS coverage



The Social Security Act was enacted to develop,
establish gradually and perfect a social security
system which shall be suitable to the needs of the
labourers throughout the Phil, and shall provide
protection against the hazards of disability,
sickness, old age and death. It provides for
compulsory coverage of all employees not over 60
years old and their employers. Mandatory coverage
is premised on the existence of and employer-
employee relationship. All employees, regardless
of tenure, would classify for compulsory
membership in the SSS, except those classes of
employees contemplated in Section 8 (j) of the
Social Security Act.
Private respondents are regular employees. As
masons, carpenters and fine graders in petitioners
various construction projects, they performed work
which was usually necessary and desirable to
petitioners business which involves construction of
roads and bridges. It is not enough that an
employee is hired for a specific project or phase of
work. There must also be a determination of, and a
clear agreement on, the completion or termination
of the project at the time the employee is engaged
(Violeta v. NLRC)
The repeated re-hiring and continuing need for
respondents services over a long span of time
(shortest is 2 years and the longest 8 years) have
made them regular employees
Also, petitioner was unable to show that private
respondents were appraised of the project nature of
their employment. He failed to show employment
contracts and records that would indicate dates of
hiring and termination. Also, no proof that he
submitted reports of termination with the Ministry
of Labor
No prescription: only 8 years had passed from the
time delinquency of employer was discovered.
Period of prescription is 20 years
No laches: no proof that private respondents had
failed or neglected to assert their right, considering
that they filed their claim within the prescriptive
Good faith of employer is irrelevant since the law
does not distinguish



Petitioner Maraguinot maintains that he was
employed in 1989 by private respondents Vic del
Rosario and Viva Films as part of the filming crew.
Subsequently, he was designated Assistant
Electrician and then promoted to the rank of
Electrician. Meanwhile, petitioner Enero claims
that he was employed in 1990 by private
respondents as a member of the shooting crew.
Petitioners tasks consisted of loading, unloading
and arranging movie equipment in the shooting area
as instructed by the cameraman, returning the
equipment to Vivas warehouse, assisting in the
fixing of the lighting system and performing other
tasks that the cameraman/director may assign.
In May 1992, petitioners sought the assistance of
their supervisor Cesario to facilitate their request
that private respondents adjust their salary in
accordance with the minimum wage law. Cesario
informed them that their salary would be increased
only if they signed a blank employment contract.
Petitioners refused to sign. As a result their services
were terminated. Petitioners sued for illegal
Private respondents assert that Viva is primarily
engaged in the distribution and exhibition of movies
but not in the business of making movies. Vic del
Rosario is merely and executive producer a
financier who invests a certain sum of money for
the production of movies. They claim that there is
no employer-employee relationship between them
and petitioners. Viva contracts persons called
associate producers to produce or make movies,
and that petitioners are project employees of the
associate producers.
LA ruled in favour of petitioners. The NLRC

WON an employer-employee relationship existed
between petitioners and Viva
WON petitioners are project employees of associate
producers who are in turn independent contractors


A job contractor under Sec. 8, Rule VIII, Bk III of
the Omnibus Rules Implementing the Labor Code
must have tools, equipment, machinery, work
premises and other materials necessary for the
conduct of the business. Here, the associate
producers have none of these; all the equipment is
owned by Viva and the associate producer merely
leases the equipment from Viva. The relationship
between Viva and the associate producers is that of
agency, as the latter make movies on behalf of
Viva, whose business is to make movies. As such,
the employment relationship between petitioners
and producers is actually one between petitioners
and Viva, with the latter being the direct employer
The employer-employee relationship can further be
established by the control test. The 4 elements of
selection, payment of wages, power of dismissal
and control are present and can be shown in the ff

The producer has to work within the limits of the
budget he is given by the company
Viva employs a Supervising Producer, who acts as
the eyes and ears of the company to monitor the
progress of the associate producers work
accomplishment. He conducts rounds of inspection
in the field to see if there is any problem that the
associate producer is encountering and to make sure
that the film project is finished on schedule and that
any additional budget requested by the associate
producer is really justified
Viva requires that the end result must be a quality
film acceptable to the company
The appointment slips issued to all crew members
contain the words superiors and top
management which can only refer to the superiors
and top management of Viva. Also, it is Vivas
corporate name which appears on the heading.
It is Viva that paid wages to petitioners, evidenced
by vouchers containing Vivas letterhead
Petitioners were part of a work pool. While they
were initially hired as project employees, they had
attained regular status since the following
conditions concur:
there is continuous rehiring of project employees
even after cessation of the project
the tasks performed are vital, necessary and
indispensable to the usual business or trade of the
Here, Maraguinot was employed for 3 years and
worked on 23 projects, while Enero for 2 years and
on 18 projects
A work pool may exist although the workers in the
pool do not receive salaries and are free to seek
other employment during temporary breaks in the
business, provided that the worker shall be available
when called to report for a project. Although
primarily applicable to regular seasonal workers,
this set-up can likewise be applied to project
workers insofar as the effect of temporary cessation
of work is concerned. This is beneficial to both the
employer and employee for it prevents the unjust
situation of coddling labor at the expense of capital
and at the same time enables the workers to attain
the status of regular employees

Private respondent Acedillo began working for
petitioner J&DO Aguilar (engaged in the business
of refrigeration) in Feb 1989 as helper-electrician.
In Jan 1992, his services were terminated allegedly
due to lack of available projects and excess in the
number of workers needed. He filed a case for
illegal dismissal when he learned that new workers
were being hired by petitioner while his request for
work was ignored
Petitioner company maintains that its workers were
hired on a contractual basis and their employment
deemed terminated upon completion of the project
for which they were hired. It claims that Acedillo
was not a regular employee because his
employment was for a definite period and made
only to augment the regular workforce
The LA ruled in favour of respondent Acedillo.
The NLRC affirmed.

ISSUE: WON Acedillo is a project employee


Project employees are those whose employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee or where the work or services to be
performed is seasonal in nature and the employment
is for the duration of the season
Here, the petitioner did not specify the duration and
scope of the project when it hired Acedillo. It failed
to present an employment contract showing that
Acedillo was engaged only for a specific project. It
is not even clear if Acedillo signed an employment
Acedillos work as helper-electrician was an
activity necessary and desirable in the usual
business or trade of the employer, since
refrigeration requires considerable electrical work.
Petitioner admits maintaining 2 sets of workers, i.e.,
those permanently employed regardless of the
availability of work and those hired on a project
basis. The practice of keeping a work pool renders
untaenable the position that Acedillo is not a regular
employee: Members of a work pool from a which
a construction company draws its project
employees, if considered employees of the
construction company while in the work pool, are
non-project employees or employees for an
indefinite period. If they are employed in a
particular project, the completion of the project or
any phase thereof will not mean severance of the
employer-employee relationship
March 29, 1984
Nature: Petition to review the decision of the
Secretary of Labor
In 1974, a complaint for unfair labor practice
was filed by Norberto Luna against Republic
While the case was still pending, there was a
substantial change in the corporate structure of
Republic Bank. To save the bank from financial
collapse, an agreement was entered into between the
old stockholders that the Philippine Sugar
Commission (PSC) will buy a substantial portion of
the bank to inject fresh capital.
As a consequence of this reorganization, the
old Republic Bank became the Republic Planters
Bank, with new controlling stockholders, board
membership and management. The bank was also
made the financing arm of the PSC.
On November 12, 1981, the Supreme Court
rendered a decision finding that Luna was illegally
dismissed by Republic Bank. The court held that
Luna is entitled to reinstatement to his former
position as San Juan Branch Manager, without loss
of seniority rights and other benefits and increases
recognized by law or granted by the bank during the
period of the illegal dismissal, with backwages
limited to three years. Republic Planters Bank only
learned of this case after it was furnished a copy of
the decision. The old management did not advise
the present management of the pendency of the
Thus, the bank filed a manifestation and
motion to bring to the attention of the SC these facts
and circumstances that occurred while the case was
still pending. The bank argues that it should not be
made to suffer the consequences of the unfair labor
practices of the old management. The bank also
manifested reinstatement of Luna to his old position
would disturb the current organizational structure of
the company.

Before the court ruled on the motion, the bank
paid Luna his backwages equivalent to three years
without qualification.
Issue: WON Luna should be reinstated to his
former position
Held: NO, he should be reinstated to a
substantially equivalent position.
Reinstatement is a restoration to a state from
which one has been removed or separated. It is the
return to the position from which he was removed
and assuming again the functions of the office
already held.
Reinstatement presupposes that the previous
position from which one had been removed still
exists, or that there is an unfilled position more or
less of similar nature as the one previously occupied
by the employee.
Closure of business There was no closure of
business notwithstanding that the bank was almost
at a brink of a financial ruin. Despite the
widespread restructuring and reorganization, the
position previously held by Luna was not abolished,
but is now held by the incumbent manager who
replaced him.
Section 4, Rule 1, Book VI of the
Implementing Rules states that:
An employee who is separated from work without
just cause should be reinstated to his former
position unless such position no longer exists, at the
time of his reinstatement, in which case he shall be
given a substantially equivalent position in the same
establishment without loss of seniority rights.
Even though his former position still exists, Luna
cannot be reinstated as San Juan Branch Manager
because such position relates to trust and confidence
and therefore the incumbent manager who has
already won the companys trust and confidence
should not be dismissed in favor of Luna, whose
competence and integrity has not been tested.
The fact that Luna had worked for the bank for 22
years without any showing of irregularity in the
performance of his duties DOES NOT prove that he
has the trust and confidence of the bank.
Economic and Business Conditions - The
reinstatement remedy must always be adapted to
economic-business conditions. The bank had to
undergo innovations (such as the replacement of
management, hiring of new managers) to ensure
recovery. To order the reinstatement of Luna to
his former position would undermine the banks
efforts at recovery
Considering these conditions, it is inevitable that
these be reflected in the desire for efficient and
productive management. This can only be
effectuated if Luna is reinstated to a substantially
equivalent position and the incumbent manager who
is now holding Lunas former position should be
allowed to continue with his tested competence
and integrity.
Other issues:
(1) Is Luna entitled to increases and benefits
recognized by law or granted by the bank during the
period of his dismissal?
NO. Mere continuance as an employee does not
qualify him for benefits and increases. Benefits and
increases are allowed because of outstanding
performance of duties and not solely because of the
length of service.
(2) Can the bank deduct the income derived by
Luna from other sources during his illegal dismissal
from the amount of backwages to be paid?
Generally YES. An employer is entitled to deduct
from what the Court orders to be paid as backwages
whatever an employee has earned elsewhere during
the period for which backwages are supposed to be
paid. Such qualification is implied in all judgments
ordering reinstatement, unless otherwise expressly
ordered by the Court. (NOTE: This ruling no
longer applies after RA 6715 was enacted on March
21, 1989. See Bustamante vs. NLRC case)
However, the bank can no longer make deductions
because it has already paid the full amount to Luna.
Equity must operate in favor of the employee
equally as it favors the employer.
August 6, 1986
Nature: Petition to review the decision of the
Luz Catenza, a high school teacher of Divine
Word College, filed a complaint for illegal
dismissal against her employer. In her complaint,
Catenza alleged that she went on a vacation leave
but when she tried to report back to work, she was
informed that she is not anymore allowed to teach
because of the misdeeds and immoral acts of
her husband Pablo, who was then the principal of
the same school
In its answer to the complaint, the school
alleged that Catenza was dismissed not because of
the acts of her husband, but because of her own
contemporaneous and subsequent conduct of
covering up and concealing the immoral acts of her
husband. Catenza apparently threatened to kill
Remie Ignacio, the victim of her husbands immoral
The Labor Arbiter held that there was illegal
dismissal, and ordered the reinstatement of
Catenza. The NLRC modified this decision by
giving Catenza a choice of whether she wanted to
be reinstated with full backwages or be separated
from the service with termination pay. (NOTE:
The NLRC considered the moral repercussions of
Catenzas act which it may have towards the minds
of the students of the Divine Word, which was a
catholic institution. )
(1) WON there was illegal dismissal
(2) If yes, WON her reinstatement is proper
(1) YES A review of the records clearly shows
that Catenza was dismissed without valid cause.
The reason why she was dismissed was because of
the alleged immoral conduct of her husband.
However, her husband was never investigated nor
was he ever convicted of the serious act alluded to
him. Catenza should not be made to suffer for her
husbands indiscretion and infidelity.
(2) NO Although Catenza was found to be
illegally dismissed, her reinstatement is not proper.
Her continued presence in the school may be met
antipathy and antagonism by the Catholic school

Thus, Divine Word is ordered to pay Catenza
separation pay equivalent to one month pay for
every year of service, plus her backwages (not to
exceed three years) from the time of the dismissal
up to the time of actual payment.

NOTE: The issue of lack of due process was also
raised by the school, because the LA had considered
the case submitted for decision despite the fact that
the school had not yet rested its case. However, a
scrutiny of the records show that the school was
afforded every opportunity to present its evidence
but no one appeared at the four consecutive
hearings scheduled for the purpose.
Espejo v. NLRC, 255 SCRA 430 (1996)
On August 1, 1987, the Cooperative Insurance
System of the Philippines (CISP) hired Espejo as
General Manager with a monthly salary of P9,000
plus some privileges, including the use of a
company car with driver.
On September 11, 1989, the Board of
Directors of CISP held a meeting to discuss the
cease and desist order issued by the Insurance
Commission against CISP on the grounds of
capital impairment and margin of solvency
deficiency. In order to meet the capital
requirements, the Board passed a resolution
authorizing the sale of some CISP properties,
including the car assigned to Espejo.
Espejo objected to the proposed sale. The
Board did not act on his objection so Espejo was
prompted to tender his irrevocable resignation
effective October 11, 1989.
On September 22, 1989, the Board held
another meeting, where they affirmed the sale of
CISP properties. The Board also resolved to act on
Espejos resignation.
On September 26, 1989, the Chairman of the
company met with Espejo who manifested that he
had changed his mind about resigning and that he
would continue as General Manager despite the sale
of the company car. The Chairman wrote a memo
to the Board on October 3 to inform the latter of
Espejos oral revocation.
On October 9, 1989, Espejo received a letter
from the Chariman relaying the acceptance of his
resignation effective October 11. Espejo replied
stating that he was surprised about this action of the
Board, since he had earlier verbally withdrawn his
resignation. On November 14, 1989, CISP paid
Espejo his unpaid benefits.
Espejo filed a complaint for illegal dismissal
and damages. The LA ruled in his favor and
ordered CISP to reinstate him to his former position
and to pay full backwages limited to three years.
The NLRC affirmed the finding of illegal dismissal
but deleted the reinstatement for having become
moot and academic since Espejo was already 60
years old. The award of backwages was limited to
18 months.
Issue: WON an illegally dismissed employee may
be reinstated even if he had already reached
retirement age
Held: NO CISP did not have any retirement
plan for its employees. Thus, Sec. 13 Book IV of
the Omnibus Rules shall apply. This rule provides
that in the absence of a retirement plan, an
employee may be retired upon reaching the age of
60 years. This provision has been construed to
mean that an employee may retire, or may be retired
by his employer, upon reaching sixty.
Thus, Espejo cannot be reinstated anymore
because he was already sixty years old at the time
the decision was rendered.
Generally, an illegally dismissed employee
who cannot be reinstated is entitled to separation
pay and backwages. However, considering that
Espejo has already reached the statutory retirement
age of sixty, he is only entitled to backwages. He is
entitled to backwages because it is a form of relief
that restores the income lost by reason of the
unlawful dismissal. He is NOT entitled to
separation pay because separation pay is oriented
towards the immediate future, the transitional
period the dismissed employee must undergo before
locating a replacement job.
However, the amount of backwages should
only cover the time when Espejo was illegally
dismissed up to the time when he reached sixty
(from October 11, 1989 to January 31, 1990)..
Moral and exemplary damages cannot be
awarded because the decision to sell the company
car was made by the Board, and not the individual
whom Espejo considers to be his enemy. Also, the
sale was made to meet certain requirements of the
Insurance Commission.
CISP also relied on the term irrevocable in
accepting the resignation and did not take into
account Espejos change of heart. This
misapprehension of Espejos intentions cannot be
deemed bad faith on the part of CISP.
Judgment affirmed, but portion relating to period
of backwages set aside. LA ordered to compute
award of backwages.
Kay Products, Inc. v. CA 464 SCRA 544 (2005)
Employees of KPI wanted to form a union. When
the management got the info, it called a meeting to
announce that the said employees were to be
transferred to an employment agency. Through a
memorandum, KPI, through its president, Mr. Kay
Lee, promised that the employees would receive
bigger and better benefits under the agency as
regular employees thereof. KPI directed all
employees concerned to sign resignation letters
preparatory to their employment with the agency.
Employees continued to report for work in
KPI but received less wages/salaries. Less than a
month later, KPI issued a Memo to the employees,
stating that the agency had been dissolved and that
there was a need for them to sign separate contracts
with another manpower agency. In the meantime,
KPI employees were able to organize their union.
The employees claimed that the petitioners
were guilty of unfair labor practice, underpayment
of salaries and service incentive leave pay, and
failure to classify them as regular employees.
Issue: WON the corporate directors and officers
are solidarily liable with the corporation for the
termination of employees.
Held: YES In labor cases, corporate
directors and officers are solidarily liable with the
corporation for the termination of employment of
corporate employees done with malice or bad faith.
Kay Lee, as the president, actively
managed the business. In fact, she was the one who
decided the employees transfer to the employment
agencies, and signed the memoranda ordering such
transfer, in bad faith. In Naguiat v. NLRC, SC held
that the president of a corporation, who actively
manages the business, falls within the meaning of
an employer as contemplated by the labor code,
and may be held jointly and severally liable for the
obligations of the corporation to its dismissed
employees. Thus, Kay Lee and KPI are jointly and
severally liable for the latters obligations.
Serrano v. NLRC, 323 SCRA 445 (2000)
Petitioner was hired by private respondent Isetann
as a security checker to apprehend shoplifters and
prevent pilferage of merchandise. Initially hired on
Oct 1984 on contractual basis, eventually became
regular on 1985 and on 1988 became head of the
Security Checkers Section. In 1991, as a cost-
cutting measure, Isetann decided to phase out its
entire security section and engage the services of an
independent security agency. Serrano was given a
memorandum terminating his services effective on
that same day on Oct 11, 1991.
Serrano filed a complaint for illegal dismissal,
illegal layoff, unfair labor practice, underpayment
of wages, and nonpayment of salary and overtime
pay. The Labor Arbiter ruled for Serrano. On appeal
the NLRC reversed the decision of the Labor
1. WON hiring an independent security agency
by Isetann to replace its current security section as a
valid ground.
2. WON the denial of the right to be given a
written notice is tantamount to an illegal dismissal.
1. No. Absent proof that management acted in a
malicious or arbitrary manner, the court will not
interfere with exercise of the judgment by an
employer. The only bare assertion is that Isetanns
real purpose is to avoid payment to the security
checkers of the wage increases provided, such
assertion is not a sufficient basis. Indeed, that the
phase-out of the security section constituted a
legitimate business decision is a factual finding of
an administrative agency which must be accorded
respect and even finality by this court. Accordingly,
SC held that the termination of the petitioners
services was for an authorized causeredundancy.
Hence, pursuant to Art. 283 of the Labor Code,
petitioner should be given separate pay at the rate of
one month pay for every year of service.
2. No. The SC do not agree that to disregard the
notice requirement by an employer renders the
dismissal of employment null and void. Such a
stance is actually a reversion to the discredited pre-
Wenphil rule ordering an employee to be reinstated
and paid backwages when it is shown that he has
not given notice and hearing although his dismissal
or layoff is later found to be a just or authorized
cause. Such rule is abandoned in Wenphil because it
is really unjust to require an employer to keep in his
service one who is guilty, for example, of an
attempt on the life of the employer or the latters
family, or when the employer is precisely
retrenching in order to prevent losses. Rather, the
remedy is to order the payment to the employee of
full backwages from the time of his dismissal until
the court finds that the dismissal was for a just
cause. But, otherwise, his dismissal must be upheld
and he should not be reinstated. This is because his
dismissal is ineffectual.
The cases cited by both Justice Puno and
Panganiban refer, however, to the denial of due
process by the State, which is not the case here.
There are three reasons why, on the other hand,
violation of the employer of the notice of
requirement cannot be considered a denial of due
process resulting in the nullity of the employees
dismissal or layoff.
a) The Due Process Clause of the Constitution is
a limitation to the governmental powers. It does not
apply to the exercise of private power, such as
termination of employment under the labor code.
b) Notice and hearing are required under the Due
Process Clause before the power of organized
society are brought to bear upon the individual. This
is obviously not the case of termination of
employment under Art 283. Here the employee is
not faced with an aspect of the adversary system.
The purpose is requiring for a 30-day written notice
before an employee is laid off is not to afford him
an opportunity to be heard on any charge against
him, for there is none. The purpose rather is to give
him time to prepare for the eventual loss of his job
and the DOLE an opportunity to determine whether
economic causes do exist justifying the termination
of his employment.
c) Another reason why the notice requirement
under Art 283 can not be considered a requirement
of the Due Process Clause is that the employer
cannot really be expected to be entirely an impartial
judge of his own cause. This is also the cause under
Art 282.
Lack of notice only makes termination Ineffectual
Not all notice requirements are requirements of due
process. Some are simply part of the procedure to
be followed before a right granted to a party can be
exercised. Others are simply an application of the
Justinian precept, embodied in the Civil Code, to act
with justice, give everyone his due, and observe
honesty and good faith toward ones fellowmen.
Such is the notice of requirement in Art 282-283.
The consequence of the failure either of the
employer or the employee to live up to this precept
is to make him liable in damages, not to render his
act (dismissal or resignation, as the case may be)
In sum, we hold that in proceedings for
reinstatement under Art 283, it is shown that the
termination of employment was due to an
authorized cause, then the employee concerned
should not be ordered reinstated even though there
is failure to comply with the 30-day notice
requirement. Instead, he must be granted separation
pay and backwages from the time his employment
was terminated until it is determined that the
termination of employment is for a just cause
because the failure to hear him before he is
dismissed renders the termination of his
employment without effect.
Puno, Dissenting
We must immediately set Wenphil in its proper
perspective as it is a very exceptional case. Its
doctrine must be limited to its distinct facts. In
Wenphil, it was clearly established that the
employee had a violent temper, caused trouble
during office hours and even defied his superiors as
they tried to pacify him. The Labor Arbiter proved
that the employee was guilty of grave misconduct
and insubordination; we concluded with the rule
that it would be highly prejudicial to the interest of
the employer to reinstate the employee, but the
employer must indemnify the employee the amount
of P1000.00 for dismissing him without notice.
At the outset, Puno emphasized that Wenphil itself
held, and repeatedly held that the failure of
petitioner to give private respondent the benefit of
hearing before he was dismissed, constitutes an
infringement of his constitutional right to due
process of law and equal protection of the laws.
Before Wenphil, we protected employees with the
ruling that dismissals without prior notice are illegal
and the illegally dismissed employee must be
reinstated with backwages. Wenphil diluted that
rule when it held that due process is satisfied if the
employee is given the opportunity to be heard by
the Labor Arbiter. It further held that an employee
cannot be reinstated if it is established in the
hearing that his dismissal is for a just cause. The
failure of the employer is for a just cause. The
failure of the employer to give a pre-dismissal
notice is only to be penalized by payment of an
indemnity. The dilution of the rule has been abused
by unscrupulous employers who then followed the
dismiss now, pay later strategy. This evil practice
of employers was what Puno expected the majority
to address in re-examining the Wenphil doctrine. At
the very least, Puno thought the majority would
restore the balance of rights between an employee
and an employer by giving back the employees
mandatory right to notice before dismissal.
J. ; 1990
FACTS: Was front office cashier of
Silahis International Hotel since November 2, 1976.
Since 1977, Corporate Policy No. 014 was
issued to minimize losses experienced by company
because of checks encashed by them which later
bounced. Petitioner allegedly violated said
policy when she encashed $1200 check of Mr.
Gayondato, the general cashier of Puerto Azul
Beach resort and nephew of EVP.
Suatengco ordered petitioner to explain and also
placed her under preventive suspension.
Petitioner wrote a letter of explanation but her
services were nevertheless terminated on October
30, 1982. LA: illegal dismissal: reinstate NLRC: set
aside decision, dismissed complaint for illegal
dismissal for lack of merit
Issue: WON petitioner was validly dismissed on the
ground of gross negligence
Held: NO
1. gross negligence: the want of any right or
slight care or the utter disregard of consequences
not proven
2. encashment violated policy but:
a. no bad faith
b. policy not strictly enforced
c. superiors were aware: petitioner told Assistant
manager Grulla who assured her that such is alright
3. The right of employer to freely select or
discharge his employees is regulated by the state
because the preservation of the lives of the citizens
is a basic duty of the state, more vital than the
preservation of corporate profit.
4. Security of tenure is a right of paramount
value guaranteed by the consti and should not be
denied on mere speculation.
Employer has a standing policy prohibiting the
encashment of checks of its employees and officials
even if endorsed by top executives of the company.
Employee herein was terminated for such
encashment after she was assured that the executive
VP approved of it. However, it is found that such
prohibition policy has been relaxed and that
respondent employer was informed of such
encashment but only acted upon it when checks
bounced. They are thus estopped from imposing the
penalty of termination. An alleged just cause for
termination cannot be used as a shield to dismiss an
employee arbitrarily. (Llosa Tan v. Silahis
International Hotel)
Interorient Maritime Enterprises Inc. v. NLRC, 235
SCRA 268 (1994)
Captain Tayog was hired by Trenda World
Shipping and Sea Horse Hip Management Inc thru
petitioner as Master of the M/V Oceanic Mindoro.
He was given the instruction to assume the
command of the vessel at Port of Hongkong where
he was to replenish bunker and diesel fuel and to
sail forthwith to Richard Bay, South Africa in order
to load 120,000 metric tons of coal. Upon
hearing that storm Gordon was to hit Hongkong,
Tayog followed up the request for oxygen and
acetylene which were necessary for the repaid of the
turbo-charger and the economizer. The
ships agent however informed them that the
supplies could be delivered only at 0800 hours, 7
hours after the ETD from the port to Africa.
Tayog waited for the supplies and voyage
was delayed. Upon arriving at Richard bay, he was
instructed to turn-over his post to a new captain and
thereafter was repatriated to the Philippines. He was
not informed of charges. POEA: validly dismissed
NLRC: illegal: no opportunity to be heard, no
evidence to prove loss of trust or confidence
Issue: WON he was validly dismissed
Held: NO
1. Confidential employees cannot be arbitrarily
dismissed at any time, and without cause as
reasonably established in an investigation.
never informed of charges
not accorded opportunity to hear
he had valid and justifiable reasons for causing
the delay
2. Captains are confidential employees who
perform both management and fiduciary functions
a. general agent of shipowner
b. commander and technical director of the
c. representative of the country under whose flag
he navigates
Azcor Manufacturing v. NLRC, 303 SCRA 26
Capulso worked with Azcor for more than 2 years
as a ceramics worker. He verbally requested to go
on sick leave because of bronchial asthma.
Capulsos supervisor approved his request but when
he reported to work, he was told that only the owner
could allow him to resume his employment.
Capulso filed a complaint for constructive illegal
dismissal when he was not reinstated even after
going to Azcor 5 times to follow up his
employment. Azcor averred that there was no
employer-employee relationship as Capulso was a
former employee who resigned. Azcor presented a
contract of employment and 2 resignation letters as
evidence. Labor Arbiter dismissed the complaint for
illegal dismissal but ordered Azcor to pay Capulso
P200. NLRC modified the LAs decision by
declaring Capulsos dismissal as illegal and
ordering reinstatement and payment of backwages.
WON Azcor was able to prove that Capulsos
termination was valid No - in cases of illegal
dismissal, burden of proof that the dismissal was for
a valid and authorized cause rests on the employer
- failure to prove the same would mean that the
dismissal is not justified and is, therefore, illegal
- in this case, the pieces of evidence presented
by Azcor was not enough to establish the validity of
the dismissal
- The contract of employment stipulated that it
was for a period of 6 months, but it was proven that
Capulso continued working after the lapse of such
- 2 resignation letters, purportedly executed by
Capulso, were presented but disregarded because
a. they were exactly worded tend to show that
they were prepared by Azcor
b. they were written in English, a language that
Capulso was not conversant with
c. they were pre-drafted with blank spaces such
that details, like the dates of effectivity, were only
filled in after
- since Azcor was the party who presented the
above pieces of evidence, it was incumbent upon
them to prove their authenticity

OSS Security & Allied Services vs. NLRC
Legaspi worked as a lady security guard of OSS
Security and was assigned at the Vicente Madrigal
Condominium II in Ayala Avenue Makati . Due to a
memorandum sent by the condominiums
administrator to the security agencys president,
Legaspi and another lady guard were relieved of
their assignments in the condominium. The
memorandum contained a complaint (about the
laxity of the guards assigned in the condo in
enforcing security measures, their alleged
falsification of logbook entries, and the
dissemination of intrigues among the employees)
and a request for the reorganization of the personnel
and replacement of some women complement.
Legaspi was detailed to Minami International Corp
in Taytay Rizal to replace a lady guard going on
vacation leave. But she did not report for work and
3 days after she was informed of her new
assignment, she filed a complaint for underpayment
and constructive dismissal.
Labor arbiter transfer not sanctioned by law,
illegal and tantamount to unjust dismissal.
NLRC affirmed LA; lady guard discriminated
upon; no reason for reassignment.

Issue: WON respondents transfer is tantamount to
illegal dismissal?

Held: NO. Transfer is valid.
The availability of assignment for security guards is
primarily at heart subservient to the contracts
entered into by the security agency with its client-
third parties. As such, being sidelined temporarily is
a standard stipulation in employment contracts. When
a security guard is placed "off detail" or on
"floating" status, in security agency parlance, it
means "waiting to be posted." Private respondent
has not even been "off detail" for a week when she
filed her complaint. The renewal of the contract of
the security agency with the condo hinged on the
action taken by the former on the latter's request in
the memorandum. Most contracts for security
services stipulate that the client may request the
replacement of the guards assigned to it and such
stipulation is valid.
The mere fact that the transfer of the respondent
would be inconvenient to her does not by itself
maker her transfer illegal. An employee has a right
to security of tenure, but this does not give her such a
vested right in her position as would deprive
petitioner of its prerogative to change her
assignment or transfer her where her service, as
security guard, will be most beneficial to the client.
Castro was hired as manifesting clerk by PAL.
Together with a coemployee, he was apprehended
by government authorities while about to board a
flight en route to Hongkong in possession of
P39,850.00 in violation of a central bank circular.
PAL was informed of the incident, and after failure
of the respondent to explain why he should not be
charged administratively, it placed him on
preventive suspension effective March 27, 1984 for
grave misconduct. His suspension lasted until
September 18, 1987 (it was for 3 years and 6
months). PAL found him guilty of the offense
charged but decided to reinstate him, with the
period within which he was out of work serving as
his penalty for suspension. Upon reinstatement, he
filed a claim against PAL for the backwages and
salary increases granted under the CBA covering
the period of his suspension. PAL denied his claim.
Labor Arbiter PAL should pay complainant his
salaries and benefits from April 26, 1984 up to
September 18, 1987 .
NLRC affirmed LA
Issue: WON respondent who was preventively
suspended for more than 30 days is entitled to
backwages and salary increases granted under the
CBA for the period beyond the 30 day limit
imposed by law
Held: Yes, for the period beyond the first 30 days
of the suspension, he is entitled to the backwages
and salary increases.
Sec 3 and 4, Rule XIV of the Omnibus Rules
Implementing the Labor Code is clear that
preventive suspension cannot last longer than 30
days. The employer may extend the period of
suspension provided that during the period of
extension, he pays the wages and other benefits due
to the workers. SC affirmed the decision of the LA
and NLRC.
Nasipit Lumber Co., Inc. vs. National Wages and
Productivity Commission (NWPC)
April 27, 1998

- RTWPB issued a wage order increasing minimum
wage rates
- Nasipit Lumber filed an application for exemption
citing RTWPBs Guideline No. 3 providing for
exemption of distressed industries
- The RTWPB approved the same.
- Union lodged an appeal with the NWPC, which
reversed the approval, because Nasipit did not meet
NWPCs criteria for exemption
- WON a guideline issued by an RTWPB without
the approval of or, worse, contrary to the guidelines
promulgated by the NWPC is valid?
- The Labor Code created both the NWPC and the
RTWPB and defined their respective powers.
- NWPC - Art 121 (c) To prescribe rules for the
determination of minimum wage, (d) To review
regional wage levels set by the RTWPB to
determine if these are in accordance with prescribed
guidelines and national development plans
- RTWPB - Art 122 (b) To fix minimum wage rates
in their region, and to issue corresponding wage
orders, subject to guidelines issued by the NWPC
- Clearly, NWPC, not RTWPB, has power to
prescribe rules and guidelines for the
determination of minimum wage; whatever wage
orders RTWPB can issue are subject to such
guidelines, and whatever exemptions are subject to
review by the NWPC.
- NWPC only provides for exemption by
establishment, not by industry, the criterion being
(i.e. accumulated losses should impair at least 25%
of paid-up capital). This criterion, Nasipit failed to
- Further, by exempting all establishments in a
distressed industry, RTWPB takes away the
mandated increase in minimum wage awarded to
affected workers, which is against declared State
policy to rationalize fixing of minimum wage.
-Thus, Guideline No. 3 is void, not only because it
lacks NWPC approval and contains an arbitrarily
inserted exemption, but also because it is
inconsistent with avowed Sate policies protective of
Employers Confederation of the Phil vs. National
Wage and Productivity Commission (NWPC)
September 24, 1991
- RTWPB-NCR issued a wage order increasing
minimum wage by P17 daily. Upon appeal by
certain employee groups, the same was amended,
also granting the increase to those already receiving
above the statutory minimum wage upto P125 per
- ECOP (employer group) contends: 1) RTWPB
may only prescribe minimum wages, not
determine salary ceilings; 2) wage-fixing is a
legislative function
- Generally, two methods of wage adjustment: 1)
floor-wage method amount added to statutory
minimum; 2) salary-ceiling/cap method
increase applied to employees receiving a certain
denominated salary. RTWPBs increasingly, are
resorting to the latter method, which has reduced
disputes arising from wage distortions brought
about, by the floor-wage method and its
- WON the RTWPB-NCR has acted in excess of its
powers in adopting the salary-ceiling method
- Wage-fixing, although a legislative function, may
be delegated, provided there are sufficient
standards. The Court finds Art. 12 of RA 6727
providing for Standards/Criteria for Minimum
Wage Fixing, sufficient to justify the grant of the
power of subordinate legislation.
- RA 6727 was intended to rationalize wages by
providing full-time boards to police wages by
giving them enough power to achieve this objective.
Minimum wage means more than setting a floor
wage to upgrade existing wages, rather, it underlies
the effort of the State as RA 6727 expresses it, to
promote productivity-improvement and
gain0sharing measures to ensure a decent standard
of living. The Court said that in doing this,
Congress meant the boards to be creative.
- At the moment, the Court finds the salary-
ceiling/cap method reasonable policy. If in the
future, the method would be perceptibly unfair to
management, the Court will take it up then.

Cagayan Sugar Milling Company vs. Secretary
of Labor and Employment
January 15, 1998
- RTWPB-Regional Office No.2 issued a wage
order increasing the statutory minimum wage.
- Later, labor inspectors examined the books of
Cagayan Sugar (CARSUMCO) and found that it
violated the wage order as it did not implement an
across the board increase, even if CARSUMCO
was paying the mandated increase in the minimum
- CARSUMCO appealed to Labor Secretary
Quisumbing. On the same date, RTWPB issued a
purported amendment to the earlier wage order,
now granting an across the board wage increase,
and further providing that the such amendment was
curative and shall retroact to the effectivity of the 1

wage order.
- CARSUMCO assails the 2
wage order on the
ground that it passed without the required public
consultation and newspaper publication
- WON the second wage order is null and void for
having been issued in violation of procedure
provided by law and in violation of Petitioners
right to due process
- Art. 123 of the Labor Code requires publication in
at least 1 newspaper of general circulation in the
region, public hearings/consultations, and giving
notices. Here, none of the requirements were
complied with.
- Respondent claims: no need to comply with
consultation and publication as the 2
wage order
merely clarified the ambiguous provision of the 1

wage order. But the Court said theres no ambiguity
in the 1
wage order mandating, in clear and
categorical terms, only an increase in the statutory
minimum. The 2
wage order providing instead for
across the board increase changed the essence of the
wage order. Non-compliance with the legal
requirements deprived Petitioner and other
employers of due process as they were not given the
opportunity to ventilate their positions regarding the
proposed wage increase.

Wage Fixing Machinery Wage Order Wage
Prubankers Association vs. Prudential Bank &
Trust Co.
January 25, 1999
- RTWPB Regions V and VII issued wage orders
increasing COLA and integrating COLA into basic
wage and increasing minimum wage rates, for
workers in their respective regions. Prudential Bank
granted the increases in its branches covered by the
wage orders.
- Prubankers Association (Union) contend that the
employees in the affected regions have higher
compensation than their counterparts, of the same
level, in other regions. They alleged wage distortion
and asked that the wage orders be applied to
employees outside of regions V and VII.
- WON there is wage distortion
- Four elements:
1) An existing hierarchy of positions with
corresponding salary rates
2) A significant change in the salary rate of a lower
pay class without a concomitant increase in the
salary rate of a higher one
3) The elimination of the distinction between the
two levels
4) The existence of the distortion in the same region
of the country
- RA 6727, in fact, recognizes existing regional
disparities in cost of living. Likewise, the
Standards/Criteria for Minimum Wage Fixing
provided for in Art. 124 of the Labor Code, as
amended by RA 6727 also takes varying cost of
living, supply and demand of basic necessities, and
purchasing power of the peso in each regions, into
- Here, in said branches of region V and VII, there
was an increase in the salary rates of all pay classes.
Furthermore, the hierarchy of positions based on
skills, length of service and other logical bases of
differentiation was preserved.
- Wage distortion is a wage parity between
employees of different rungs of the same
establishment. Here, instead, there is a wage
disparity between employees in the same rung, but
located in different regions, which according to the
Court, does not constituted wage distortion as
contemplated by law.
- Union challenges Banks abandonment of a
national wage structure for a regionalized structure
in violation of equal pay, for equal work. The Court
holds to the position that a uniform national wage
structure is antithetical to the purpose of RA 6727
on its face. In any event, it adds that its decisions
merely enforce the law, and that it does not have
power to pass upon wisdom or propriety.
- Union argues that regional offices of the Bank
should be construed as merely branches of the
establishment (which is the whole bank) in
relation to the IRR of RA 6727. The Court belies
this argument by quoting the whole provision
referred to by the Union, which omits an integral
part stating that wage rates shall be those applicable
in the place where they are sanctioned. Further, the
Court cites NWPC Guideline No. 1 where it is
expressly stated that establishment refers to an
economic unit which engages in one or more
predominantly one kind of economic activity with a
single fixed location.
- Union also alleges that Bank violated established
management practice of uniform wage policy. The
Court held that such practice was adopted prior to
the enactment of RA 6727, and that, while the Bank
still applied a nationwide implementation of the
first wage orders, such single instance cannot be
constitutive of management practice.

Wage Payment and Protection From of Payment
Congson vs. NLRC
April 5, 1995
- Congson is the owner of Southern Fishing
Industry. Private respondents are regular piece-rate
workers paid P1.00 per tuna-movement (unloading
from ship, to storage plant, and loading for
- Congson proposed to reduce the rate per tuna-
movement due to the scarcity of tuna. Private
respondents resisted, and so were replaced by a new
set of workers.
- Private respondents sued for constructive
dismissal, and wage differentials for failure to meet
minimum wage requirements.
- With regard to the wage, Congson argued that the
computation of the wage should consider that, as
agreed upon, respondents get the intestines and liver
of the tuna as part of their salary (3 kilos per
shipment, saleable @ P15.00 to P20.00 per kilo)
- WON the minimum wage was met considering it
was agreed that part of the workers wages would
be paid in tuna intestines that they could sell for
substantial value.
- The Labor Code expressly provides:
Article 102. Forms of Payment. No employer shall
pay the wages of an employee by means of,
promissory notes, vouchers, coupons, tokens
tickets, chits, or any object other than legal tender,
even when expressly requested by the employee.
- Undoubtedly, petitioner's practice of paying the
private respondents the minimum wage by means of
legal tender combined with tuna liver and intestines
runs counter to the above cited provision. The fact
that said method of paying the minimum wage was
not only agreed upon by both parties in the
employment agreement but even expressly
requested by private respondents, does not shield
- With regard to the contention of Congson that
there is no strained relationship, so an award for
separation pay is not proper since reinstatement is
an option, the Court held that there was. This is
supported by the fact that Congson refused to re-
admit respondents into his establishment (which
Arturo Lagniton, Sr. vs. National Labor Relations
Commission, et al provides, is constitutive of
strained relations), and that respondents themselves
already indicated an aversion to their continued
employment with Congson by their filing a second
case specifically for separation pay.
Wage Payment and Protection Person to Pay
Bermiso et al vs. Escano, Inc., et al
February 28, 1959
- Bermiso et al are the 5 left of 45 stevedores
originally bringing this complaint, belonging to a
chapter of a Union in Cebu under a foreman or
Cabo named Sabay.
- Hijos de F. Escano (Company) is a carrier of
goods by water.
- Escano contracted stevedoring services
exclusively from Sabays group. Escano has never
paid the Sabay group; the practice from the start has
been for Sabay, as leader, to collect charges for
handling of the cargo from the shippers or
consignees. The net income from collections, he
then distributed to the stevedores.
- WON the law on direct payment of wages is
- The nature of the stevedoring work necessitates a
large group, which in turn necessitates a leader
because: the group renders services for various
employers, so someone has to determine which
members will work for one vessel and which for
another, also employers prefer to deal with a leader
instead of each member individually.
- The work of stevedoring was undertaken by
laborers, not in their individual capacities, but as a
group. And the contract to perform the service was
made by the leader, Sabay, for and on behalf of the
latter, not for each of them individually.
- There was no showing that Sabay as leader was
engaged in racketeering, nor that he appropriated a
lions share of the income he collected. As such, the
Court claimed that it was not prepared to say that
there was a violation of the provision on direct
payment of wages.

- Further, stevedoring charges were collected from
shippers themselves; Escano is not the one obliged
to pay such charges.
- With regard to payment of backwages (because
some stevedores were not allowed to work certain
jobs and thus denied a share in the price therefor),
vacation and sick leave, accident, insurance, etc.,
the Court held that these must be sought through
labor organizations by collective bargaining.